The Importance of fintech in the development of smart cities
Over the past couple of years, many countries in the Gulf have been embracing digital transformation journeys to diversify their economy and establish smart cities. The United Arab Emirates (UAE) has been one of the most forward-thinking nations when it comes to implementing strategies that prioritize investing in innovation and adopting the right technologies.
In fact, IMD’s 2019 World Digital Competitiveness Report ranked the UAE as the number one digitally competitive country in the Arab World and the 12th globally.
With the government’s vision to become completely cashless by December 2021, the adoption of technology has been a major catalyst in the digital transformation of the UAE’s financial sector.
The rise of fintech has made it possible for financial institutions and banks to offer digital services that are tailored to the needs of each and every customer. Advanced digital solutions that are flexible and secure are changing the way transactions are being made.
For example, banking on the cloud allows organisations to innovate and quickly adapt to constantly changing market conditions. Cloud technology is secure and stable, yet nimble and flexible. Within hours, banks can reconfigure products and services to take into account new regulations or unexpected business requirements. In the long run, this not only cuts risk but also minimises any locked-in costs.
As competition between financial entities becomes more aggressive, they need agile solutions that will enable them to differentiate and adapt quickly. As a result, customers will have real choices for the first time – choices that will add value to their banking experience and even their lives.
Hence, a modular approach to banking is no longer sufficient to allow banks to thrive in this digital-savvy era. A modular approach is now just like a jigsaw puzzle that combines different pieces into one pre-set picture, and it is impossible to swap out pieces for better ones. Whilst modularity offers a pre-defined suite of proprietary modules that extend the functionality of their core systems, it is neither flexible nor open.
Composable banking is an approach that utilises scalable, secure cloud-native technology to enable financial institutions to design and deliver flexible and scalable digital services. It helps banks create and scale modern customer experiences that can constantly evolve to respond to change and drive smart city initiatives.
Instead of locking specific functions together for dedicated applications and workflows, composable banking separates the functions so they can be combined and recombined with different partners or services in new ways to deliver new services. This means being able to combine independent components, re-use, swap in or swap out any component and work with best-for-purpose providers.
In this digital and competitive era, it is vital for countries to walk in the footsteps of the UAE and develop a comprehensive digital transformation strategy. It is equally as important to adopt the infrastructure and technology that will enable digitisation goals to come to life while being ready to adapt to customers’ needs.
Fintech has been playing a major role in the digitisation of the UAE. That said, the future of financial services will remain a moving target and to succeed in a market that keeps changing, banks need to be able to move quickly and be agile, composing new products and services faster. Hence, a modular system should be replaced with a cloud-friendly composable approach.
Islamic fintech Wahed plans UK expansion: Hires expert GM
Wahed Inc has hired a leading industry expert to take Islamic finance forward in the UK marketplace.
Umer Suleman has been appointed as General Manager of UK operations for Wahed Inc.. His role will include overseeing Wahed Invest’s nationwide growth strategy and strengthening the firm’s position as a leading provider of ethically focused investment services.
Suleman’s track record includes over 15 years of regulatory, risk, and strategy consultancy roles, as well as advisory positions across a variety of businesses and sectors including positions at UKIFC, Daiwa Capital Management, and Ernst & Young (EY).
He also spent seven years at HSBC as Head of KYC Risk globally within their Global Banking and Markets business, Head of Business and Conduct Risk for MENA within Retail Banking, and headed up the CCO function for Digital (GLCM) within the UK with a global remit.
Wahed and the growing role of Islamic finance
The startup fintech was founded in 2017 and is an American company based in New York City. Since its inception, it has grown from strength to strength and in July 2019, launched the first exchange-traded fund in the US that was compliant with Sharia law.
Islamic finance typically refers to the way businesses and individuals raise capital in accordance with Sharia, or Islamic law. It also refers to the types of investments that are permissible under Islam.
Wahed currently operates in 130 countries and has offices in Washington D.C, New York, London and Dubai. It has also developed an easily accessible digital platform that balances ethical finance with modern investments, attracting over 200,000 active clients from around the world with features such as free portfolio recommendations and no hidden fees.
Wahed UK expansion plans
According to reports, the UK is highly receptive to services in the Islamic finance sector and is also one of the fastest-growing markets globally. It has a three million-strong Muslim population and one of the most developed Islamic finance sectors outside of the traditional Muslim regions, with global population figures projected to double over the next forty years.
It is hoped Suleman’s leadership of Wahed will address the underbanked needs of the Muslim community while also serving the increasing number of retail investors currently seeking ethical alternatives to wealth creation.
Speaking about the new role, Wahed CEO, Junaid Wahedna, explained “Mr. Suleman’s appointment reaffirms our commitment to providing innovative and outstanding ethically driven financial services to a market that, historically, has been underserved.
“We’re delighted to welcome Umer to the team and firmly believe that with him at the helm, our operations in the UK will continue to go from strength to strength and provide customers seeking ethical investments with accessible, trustworthy and innovative solutions.”
The appointment follows on from Wahed’s recent investment round and its acquisition of the UK-based fintech Niyah.
These events will support the company in its plans to build an Islamic marketplace that meets growing demand for socially conscious investors – and not just those of Islamic faith.
The fintech firm also plans to utilise the UK’s position as a leading hub for Islamic finance as a springboard into other European cities, and believes it has a central role to play in providing Shariah-compliant services that address inclusion and inequality.
The Islamic finance industry is currently valued at around US$2.4trn and is expected to grow steadily by 10-12% over 2021 and 2022, having experienced rapid growth in recent years.
THREE reasons why Islamic finance is a growing sector
- The UK Muslim population is growing - and has been traditionally underserved by incumbent banks. The Muslim population is growing twice as fast the world’s non-Muslim population and Islamic finance address this group’s needfor Shariah compliant financial products.
- It encourages financial inclusion. According to the World Bank, financial inclusion is defined as individuals and businesses having access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.
- It supports Sharia compliant products. Transactions that work with industries forbidden in Islam (gambling, usury and speculation) are forbidden. Islamic banking only works with businesses that adhere to their ethical and moral standards.
Image credit: Wahed Inc team