This document discusses the opportunities for Islamic finance to adopt innovative technologies. It argues that disruptive technologies like blockchain have the potential to transform payment processing and that Islamic banks must invest in new technologies or risk losing growth opportunities. The document outlines several technologies Islamic banks could adopt, including ubiquitous banking through mobile apps, greater use of social media, and cloud-based services, to provide more convenient services and improve competitiveness.

2. it & Islamic Finance
Nida Khan
INSIDE
01
Innovative Islamic Banking
Furqan Ahmad05
13 18
MIT Talks
22 Sarah Afker 24
Recent Developments bode well
Aun Rizvi
Technology & Soft Skills
Fayaz Ahmed Lone
Financial Reporting of Islamic banks
Anas Zarka

3. This indeed is the focus of this month's issue of IFT where we have two well known
pioneers in the industry stressing the need with persuasive arguments. Nida Khan, the
developer of the world's first Islamic Finance Education App, in her contribution on
Information Technology and Islamic Finance, rightly points out that this is the most
opportune time for the industry to take a major leap forward by adopting the latest
technology into its core banking practices, to give it the desired competitive edge over
conventionalplayers.
Her particular focus is on game-changing disruptive technologies. She's right. In a
context where Islamic Bankers have had to survive in a rather uneven playing field
dominated by big-time conventional players, it is the adoption of innovative ideas that
can tip the balance in our favour. Islamic Banks and Finance Institutions, though based
on time-tested Islamic values are relatively new to the global banking landscape and
are hence better equipped to adopt innovative practices. Diving into the blue ocean is
thereforethenaturalthingtodo.
Her sentiments are echoed by Furqan Ahmad, a well known banker who has been
instrumental in setting up Islamic banks in the US and GCC and has spearheaded a
number of innovative Islamic Banking Products. His paper on Innovative Islamic
Banking proposes a host of innovative ideas Islamic Finance Institutions can adopt to
survive and thrive in today's highly competitive environment, among them, getting
more immersed in promoting and showcasing the products for which they offer
financing, since as he argues, an Islamic Bank must ideally act like a business itself.
Among other things he proposes is Self-Service Islamic Banks, Islamic Banking
Concept Stores, and not the least, a single online digital portal for Islamic Banks, for
which he even proposes a name, Islamic Mint, which could revolutionize the way
IslamicBankingis done.Any takers?
Beyond the Horizon
Islamic Finance Today is a monthly magazine exclusively
dedicated to Islamic Finance & Banking published by Pioneer
Publications (Pvt) Ltd. It contains a variety of interesting
articles including exclusive interviews, news and views on
variousaspectsoftheindustry.
No part of this publication may be reproduced in any form
without the prior written permission of the publisher. Views
expressed in this publication are not necessarily those of the
publisher.
Editor in Chief - Asiff Hussen
Layout & Design - Nimry Marikkar
Marketing & Circulation - Anfas Anees
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Phone: +94 11 7395090-3
EDITORIAL
Asiff Hussein
Editor-in-Chief
IslamicFinanceToday
Technological innovations the world over are taking place
at such a pace that one simply cannot ignore them, which is
all the more so in a dynamic industry such as banking. As
such it bodes well for the Islamic Banking & Finance
Industry to look beyond the horizon towards the wider blue
oceanthatisinnovation.

4. Nida Khan

5. Nida Khan is the developer of the world's first Islamic Finance
Education App. She served as a Researcher at the University of
Luxembourg focussing on data security in online social networks.
She holds a Masters Degree in Information and Computer
Sciences as well as a Master Diploma in Islamic Finance and a
certificateon IslamicFinancefromAUSCIF
The Islamic Banking & Finance industry has today bloomed into a
full-fledged industry that provides capital market products and
services including Islamic insurance services. At the end of 2014 the
sizeofthemarketwas $1.7Trillion.
25 rapid growth markets are driving the economy of the world and out
of these 10 have large Muslim populations.Therefore the potential for
Islamic Finance is huge and growth will remain sustained if
innovation and integration of more technology into the basic
infrastructureofIslamicbanksismetwith.
Digital currencies and virtual wallets are still in their infancy but they
are being adopted more and more. In many countries many people
don't have bank accounts and credit cards but they have a mobile
phone. In countries where poverty is an issue and banks lack the
proper infrastructure, virtual banking will play a greater role. Islamic
Microfinance programs have in fact been developed to cater to this
segment. Thus equipping Islamic Microfinance with the right
technologyistheidealsolution.
Indeed, this is the most opportune time for the Islamic Finance
industry to take a major leap forward by adopting the new technology
to its core business practices which will give it the much needed
competitiveedgeovertheirconventionalcounterparts.
DisruptiveTechnologies
The blockchain network based corporate model will be
fundamentally different in its make up and functionality because it
will be independent of human intervention while being
simultaneously owned by no party. Thus blockchain has the
capability to become one of the most disruptive technologies of the
future in the payment processing arena. With a blockchain all that is
needed for a secure money exchange is an internet connection.
Besides, blockchain technology is safe and tamper proof with money
exchange taking place instantly. Blockchain solutions provide ease to
customers as they no longer have to wait for days for payments to be
processed. With the increase in the number of mobile phone users
coupled with ease of network access, the need for financial
institutionswilldeclineiftheydon'tkeepupwithcurrenttrends.
Information Technology and Islamic Finance
By Nida Khan
IFT 02Islamic Finance Today - October 2015

6. The advent of Payment Service Providers like Amazon, BitCoin has
already put banks in the background. The customer is not concerned
with which service he is utilising and he would go with firms he relies
more upon like Google, which might start functioning like a 'real' bank
in the future. Thus there is an urgent need for banks to shed their
traditional cloaks and manage their relationships with the customer
through the plethora of platforms available nowadays. The coming
challenges can take the banking industry and financial institutions by
stormiftheyareunprepared.
Financial institutions, central banks and stock exchanges are all
developing blockchain solutions because of its security features and
ease of use. Islamic finance and banking institutions need to invest
heavily to come to terms with the emerging information technology
needs or else the forecasted growth in the coming years would soon
recede in the background in the face of emerging disruptive
technologies.
Ubiquitous Banking
Consider a mobile app that enables shoppers to scan a QR code and
purchase the desired item. In this scenario a single step of let's say
scanning the code with the mobile app accomplishes the loan,
purchase and delivery of the product without either going to the bank
or the checkout counter of the store.This kind of ubiquitous banking is
a reality for the coming times with GSMA offering the services of E
Sim that carries the account details. Payment transfer services are
linked to the identity of the user through efficient and secure
cryptographicprotocolsofferingbothauthenticationandsecurity.
Thus Islamic finance institutions have to open up more touch points to
banks to facilitate anytime and anywhere banking. This should be
achievable with any electronic device the customer has. Customer
origination, account origination and verification can be initiated
online and completed either through a branch or a call centre.This will
leave the staff to cater to more critical tasks that cannot be automated.
Similarly payments, inquiries, service requests and fund transfers can
be initiated online. Conventional banks have adopted these
technological advances and have witnessed an increase in both the
customerbaseandproductivityoftheemployees.
SocialMedia
Social media has become the new way of communication. The reach
of social media by virtue of more than a dozen different social
networks is staggering. Banks need to build a significant social
presence if they are to survive. Social media generated peer
recommendationfurthersbothsocialanddigitalmarketing.
IFT03 Islamic Finance Today - October 2015

7. Customers like to share their banking experience with friends and this
can serve as a generator of trust in the bank. Viral marketing can
increase the reach of the bank and attract more customers. Secure
banking should be made available through this portal, simultaneously
takingcareofprivacyissues withthecustomersdata.
Cloud based Services
In this age of emerging technologies more and more businesses are
adopting cloud technology to reduce costs, increase their flexibility,
gain new capabilities, provide scalable solutions and improve
operationalefficiency. It has beenestimatedthatfinancialservicesthat
spend on the cloud could make up to one quarter of their total
spending.
Banks would have to develop a secure way to provide access to the
information in its database or maintain the data in a private cloud or a
hybrid cloud. IBM has tied up with Juniper for next generation data
centres, could computing and more. Banks should also focus on such
alliancestomanagetheirdatasecurely.
In conclusion, the adoption of technology-based, customer-centric
solutions can go a long way in bridging the gap between the Islamic
and conventional sector. Digitization, customer engagement and
impact banking should form the defining goals for the new strategies
adopted by Islamic banks if they are to succeed in today's highly
competitiveworld.
IFT 04Islamic Finance Today - October 2015