The Islamic financial industry needs to take advantage of the wave of disruptive digital technologies to ensure the industry's development, sustenance, and relevance in the global economy.
Acting Director General of the Islamic Research and Training Institute (IRTI), Dr. Sami Al-Suwailem, said this in a keynote speech delivered during the 25th World Islamic Banking Conference, which opened yesterday in Bahrain under the theme "Islamic Finance and Sustainable Economic Growth in the Age of Disruption".
Speaking on the prospects and risks of disprutive technologies as it affects Islamic finance, Dr. Al-Suwailem said the Islamic financial industry stands to gain a lot from these technologies to provide innovative services for the benefit of the communities it serves.
"The digital revolution we are witnessing is a great opportunity but also poses some risks. Taking the lead in managing and taming this revolution will shape the future of Islamic banks and their economies," the Acting IRTI DG said.
"First, it is a matter of survival. Those who refuse to change are doomed to perish, in one way or another. However, there are many encouraging reasons to embrace the change. It starts with the nature of Islamic finance."
Dr. Al-Suwailem said Islamic finance could utilize the opportunities provided by e-commerce as the new avenue for businesses, which has exceeded USD 10 trillion worldwide, making it about three times bigger than the size of the Islamic financial industry.
"This means that there is an ample room for the industry to invest and to participate in the digital revolution," he said.
"E-commerce seems to be a promising sphere. With the fintech revolution, online sales can seamlessly meet the requirement of Islamic finance. If Islamic banks invest in this area, they will be able potentially to reap lucrative returns from a growing large sector, manage their liquidly efficiently, and participate in real economic growth and development."
Dr. Al-Suwailem said also that fintech and blockchain technology will help Islamic finance in the aspect of integrating finance with real economic activities, which is at the core of Islamic finance. He explained that blockchain technology, when integrated with other technologies, will ensure complete traceability of commercial activity and thereby help Islamic banks to identify the appropriate entry and exit points of the commercial activity to provide financing.