Islamic Financial Institution to Launch Interbank Blockchain Tools
An agreement has been signed between iFinTech Solutions, a Tunis-based fintech firm, and the Islamic Corporation for the Development of Private Sector (ICD), the private sector arm of Islamic Development Bank Group (IsDB), according to its press release. Under this agreement, iFinTech Solutions would develop blockchain solutions to be deployed and implemented into Islamic banks worldwide.
The partnership would involve a suite of fintech products that will be developed and implemented to help resolve a set of long-standing liquidity management issues peculiar to Islamic banks. Of all these products, the very first would be a new transaction platform that will help with transacting in real commodities (basically acting as a commodity market).
The objective of this platform will be to combat the inter-banking issues that ensue when facilitating transactions between conventional financial institutions and Islamic banks, while also ensuring that the conduction of banking transactions and operations continues to be Shariah-compliant.
The proposed banking platform will also incorporate blockchain technology into its working mechanism, as the developers will be looking to harness some of its peculiar benefits. With blockchain technology, the platform will be able to reduce the time taken for transactions to be executed, while also keeping the overall cost of conducting both commercial and financial transactions at a moderate level.
While Islamic liquidity management tools have become common in developed countries like Indonesia and Malaysia, they continue to be scarce in a lot of Muslim-majority markets. With the development of this liquidity management tool as well as its implementation on a global basis- Islamic banks will be able to manage their liquidity needs better.
Mr. Ayman Sejiny, CEO of ICD noted in the release:
“IT will always play an important role in the financial system. We will consistently pursue our strategy of service orientation and help our partners with innovative Sharia-compliant FinTech solutions.”
Arab countries have been quite conservative on their stance with cryptocurrency while promoting the use of blockchain for public and private enterprises. Last month, the Saudi British Bank (SABB) joined the global banking consortium R3’s blockchain ecosystem as it seeks to leverage the advantages of faster transactions and security that accrues from blockchain based solutions.