Qatar’s Islamic fintech sector ranks sixth globally

Doha: Qatar has the sixth highest number of Islamic fintechs globally, which is expected to increase further with the new initiatives announced in the country’s financial sector, according to an official. The Islamic fintech sector has continued to grow rapidly, with over 375 Islamic fintechs globally, serving a wide range of customers and financial needs via multiple new technologies.

Speaking at the 4th Islamic Financial Services Board (IFSB) Innovation Forum recently, Abdul Haseeb Basit, co-founder and principal at Elipses, discussed how Islamic fintech is a promising sector in fintech and shared the key findings from the global fintech survey.

He said: “Islamic fintech is not only an evolving and exciting element of the fintech sector, but it is also a very evolving and exciting part of the Islamic finance sector. According to the Global Islamic Fintech Report 2022, the global Islamic fintech market size for Islamic fintech globally in 2021 $79 billion in terms of transaction volume, which is expected to grow around 18 percent by 2026 to reach a size of $179 billion. So there is certainly trajectory and momentum in the Islamic fintech space.”

Basit added: “Qatar now has the sixth highest number of Islamic fintechs in the world, which is a huge year-on-year development for Qatar. We expect the trajectory to only increase with some of the initiatives being announced. Islamic fintech has a role to play in using technology to provide access to underserved segments.

Of the 375 Islamic fintechs globally, the top 10 countries produce 82 percent of Islamic fintechs, with 50 percent of Islamic fintechs in the top five subsectors.

Dr. DalalAssouli, associate professor at HBKU discussed how stakeholders are driving digitization and innovation in the Islamic financial industry. She noted that the main stakeholders are financial institutions, regulators, fintechs, but also academic institutions and investors.

“If we look at the global landscape and the most important challenges, there is mobilization for climate change and meeting the SDGs agenda by 2030, and for that there is an investment gap of 2.5 trillion dollars which goes up to 4 trillion dollars. Therefore, private sector’s role is crucial to address this financing gap, and the financial sector in particular, and that is why we see more and more incentives for financial institutions to innovate and contribute more to sustainable finance, said Dr. Assouli.

For financial institutions, it requires a paradigm shift in how they conduct financial intermediation and looking at how they decide on their strategic priorities as institutions and redirect more investment and funding to certain sectors and activities that support this goal. This means that a lot of ESG data is needed for decision-making for these institutions.

She added: “We have seen some large institutions develop their own departments for this purpose, but smaller institutions may rely on other providers and this is where we see the role of fintech in facilitating this role. In terms of providing ESG -data for decision-making, but also to facilitate the innovation of sustainable financial products.”

Dr. Assouli further noted that there is enormous potential for fintech in facilitating ESG integration for financial institutions both through the quality of data, but also on the alternative financing and mechanisms that can help them address specific needs of these vulnerable groups, ” she added.