New Resources for Islamic Finance: Islamic Fintech
Authors: DEMİRDÖĞEN Yavuz 
Published: October 2021

Financial Technologies (fintech) is the application of digital technology in financial services. It has been accelerated after the 20008 crisis. Fintech initiatives could be both disruptive and supportive for the finance industry. Even the sector has benefited from these innovations, most of the applications could change the game. The race started with cryptocurrencies (especially bitcoin) but in the meantime, fintech are diversified into more than 50 sub-branches. Almost all of them are innovative, applying high tech and competitive. Although the conventional banks (CBs) and financial intermediaries are giants (with respect to fintech start-ups) fintech are targeted new and worthless customers. Most of the start-ups find their path for growing their assets within this concept. Besides giant tech companies are formed their payment and financial systems and named Bigtech. On the other hand, almost %50 of fintech initiatives are collaborating with banks. Their innovations are based on optimizing and enriching the bank mechanism including mobile payment systems. These firms need customers to develop their findings and banks to apply their applications.
In recent years, some fintech sub-branches such as crowdfunding, P2P lending, lendtech, etc. are based on social developments. The number and volume of these fintech are growing rapidly. The objection of new initiatives are changing into social projects and collaboration which are not subjected by CBs. Especially after the Covid-19 pandemic, these start-ups are being hyped projects in fintech ecosystem. In Islamic finance, unlike the capitalist mentality, intention and social benefit are primary goals. Islamic fintech could serve humanity and be even profitable. In this aspect, this group of fintech could serve as Islamic consciousness.
The term “Islamic fintech” represents the fintech that designs and works according to Shariah principles. Some sub-branches of fintech are fit in the Islamic perspective that avoids interest (riba), uncertainty (gharar), and chance/gambling (maysir). Islamic finance -in general- shape by global financial standards and products. Almost all Islamic banking products are derived from conventional banks. So, they must compete and make a profit like CBs. Since CBs have no limitations and hunger for profit, Islamic banks (IBs) could not be able to keep up with them. Islamic fintech could serve as an intermediary for IBs without restrictions. Fintech initiatives do not need physical branches, centers, and appearance. They settled on the internet, could reach the unbanked population, and have the lowest spread for transactions. With these advantages, Islamic fintech could be the new resource for Islamic finance.
There is more than 150 Islamic fintech around the world. Almost half of them are constructed in Islamic countries and others are in developed ones. Islamic fintech in the USA, UK, and Europe are much more professional. It seems that competition makes them better players in the same ecosystem. Islamic fintech has some opportunities and challenges. These challenges are based on the Shariah-compliance perspective and global issues. Almost every fintech start-ups (including non-Islamic ones) are faced the same challenges. On the other hand, Islamic fintech has opportunities because of being “Islamic”. The Muslim population is ready to accept these firms, the unbanked population is concentrated in Muslim countries, and the Islamic tenet supports social generosity could be some advantages for them. In this article Islamic fintech landscape has been evaluated. The benefits of fintech in Islamic finance are recognized and challenges and opportunities for Islamic fintech are studied. In the end, recommendations are listed and explained for the emerging of Islamic fintech.