Another important development in this recent decade has been the growing emphasis on responsible, inclusive and sustainable finance. The global financial crisis provided a dramatic reminder of the basic purpose of financial intermediation – as a means to create sustainable value in the real economy. Without this anchor, finance will always be inherently unstable. The central role of finance in any economy also places a critical responsibility on financial actors to promote and embrace responsible behavior, consistent with the long term preservation and development of the economy, society and environment. In a number of developed markets, Sustainable, Responsible and Impact Investing (SRI) and Environment, Social and Governance (ESG) considerations are gaining significant momentum. Similar trends are also starting to gain traction in emerging markets. Islamic finance is uniquely positioned to champion this cause, guided by the overarching Shariah principle which emphasises the protection and preservation of the benefits and interests of society at large. More than 750 verses in the Quran relate to the importance of achieving balance and moderation in one’s life, whilst being responsible and accountable in the use of natural resources. The Islamic finance agenda must therefore embrace this cause as its core mission – a mission that has become more urgent in light of growing economic and social inequalities and environmental concerns. The first Socially Responsible Investment Sukuk that was issued last year is an example of impact investing that generates positive social outcomes.

Positive transformations taking place around us will continue to pave the way for new growth opportunities for the industry. Collectively, we need to understand these developments and leverage on them to advance economic and social goals, and manage the attendant risks. Today, I would like to touch on three key issues, the rise of fintech and its impact on Islamic finance, the growing importance of responsible, inclusive and sustainable finance and the preconditions necessary to sustain a value-based financial system. One of the most significant transformational developments of our era is the technological revolution. More specifically, the fintech revolution was made possible by maturing social, mobile and cloud technologies. The digital revolution and widespread penetration of technology-driven applications in nearly every segment of the financial sector is already upon us. Fintech innovations are fundamentally altering the way we experience and deliver financial products and services. According to a recent McKinsey report, the number of fintech start-ups globally has now exceeded 2,000, more than twice the number less than a year ago. Such growth is expected to continue as innovators tap into the preferences of millions of technology savvy millennials who are more receptive to new ways of consuming financial services. Fintech is challenging the status quo of the financial industry. New business models will emerge. Delivery channels will challenge existing norms. Transaction costs will be reduced. Rather than looking at the fintech revolution as unwelcoming, financial institutions ought to embrace it as an opportunity.