Scope of Islamic Fintech in Pakistan

Islamic Fintech Industry is growing rapidly in Pakistan as Pakistan provides a huge untapped market, which was previously excluded from the financial circle. Islamic Fintech industry provides ways of Shariah compliant, transparent, digital, easy and quick banking facilities that are cost effective and completely automated and standardized. Many new companies are coming to fulfill this need in Pakistan. Pakistan is home to a population of over 225 million people, with an overwhelming Muslim majority. The country has 22 banks, 17 of which have stand-alone Islamic windows and 5 are fully fledged Islamic banks. Still there are around 80 million adults in Pakistan without Bank accounts, while only about 2.5% of the population has access to financing products. Thus, there is huge market opportunity for Islamic Fintech to step-in and tap this segment of population. This great market opportunity is driving the growth of Fintech Companies in Pakistan. 

The main aim of Islamic Fintech is to provide a solution to the basic issues faced by Muslims in the current banking system and provide them with smart solutions in line with the teaching of their religion. There are many challenges and difficulties faced by users of traditional banking system such as long waiting time, high charges, poor service, lack of awareness etc. In addition, many Islamic banks are also facing problems related to documentation process due to lack of knowledge and skill to operate these systems. Islamic Fintech companies can provide smart, tech-savvy solutions for these issues and also tap the unbanked sector in Pakistan and cater to their investment and financing needs with their new innovated products and service solutions.

Some of the key areas where the Islamic finance model integrated with technology, can be used today are as follows:   

  • Education – To make education easier for children and adults alike. 
  • Health Care – To make health care more accessible for patients. 
  • Business – To facilitate business transactions. 
  • Finance – To enable access to credit for individuals and businesses specially SMEs. 
  • Insurance – To allow takaful customers to pay less for premiums. 
  • Real Estate – To allow real estate owners to sell faster at higher prices and to reduce costs associated with buying and selling property. 
  • Trade – To allow traders to buy and sell goods without delay. 
  • Social Services – To allow social workers to offer services to needy clients without being limited by the traditional banking rules. 
  • Micro-Finance – To help micro-finance institutions (MFIs) expand into underserved markets. 
  • Islamic Banking – To provide an alternative to conventional banking services. 
  • Islamic Credit Cards – To provide better protection and security to cardholders and merchants. 
  • Islamic Investment Funds – To enable investors to invest in asset classes that are currently unavailable. 
  • Islamic Brokerage – To provide investment opportunities to small investors. 
  • Islamic Hedge Funds – To create shariah-compliant risk management tools to protect against volatility. 
  • Islamic FinTech Start-ups – To create innovative technologies and products to serve the needs of Muslim consumers. 
  • Islamic Financial Products – To create products that adhere to Islamic principles. 
  • Islamic Capital Markets (ICM) – To create a capital markets infrastructure that is compliant with Islamic principles. 
  • Islamic Real Estate – To create a marketplace that facilitates the purchase and sale of real estate. 
  • Digital Islamic Finance – To develop digital protocols that address the unique requirements of Islamic finance. 
  • Islamic Asset Management – To manage assets and investments according to Islamic principles. 
  • Islamic Technology – To provide technology platforms that support Islamic finance transactions and products. 
  • Islamic Accounting & Reporting Standards – To improve accounting standards and reporting practices. 
  • Islamic Taxation – To develop tax policies and procedures that ensure compliance with Islamic principles and values. 
  • Islamic Banking & Insurance – To provide financial products and services that comply with Islamic principles. 
  • Islamic Insurance – To create insurance products that adhere to Islamic principles. 
  • Islamic Equity Crowdfunding – To increase access to equity crowdfunding for Muslims. 
  • Islamic Wealth Management – To develop wealth management strategies that integrate Islamic principles. 
  • Islamic FinTech Industry – To create an ecosystem of FinTech startups that leverage the power of Islamic finance. 

Growth of Islamic fintech:

The Islamic Fintech sector is growing rapidly in Pakistan as well as in the rest of the world. As per the report published by United States Department of Treasury, the Islamic FinTech industry is expected to grow at a rate of around 18% annually. According to PWC, the size of the global Islamic capital market will reach $1 trillion by 2025. The main focus of Islamic Fintech is to provide a simple and easy way to understand and use Sharia compliant products and services. They are working on different levels like; 

  • To help people who are not financially literate. Educate people about the different types of Islamic finance available and how to choose the best one for you. 
  • To understand the importance of saving money and giving back to the community. 
  • To provide solutions to those who are short of funds. 
  • Bring down the cost of borrowing money to provide low-cost loans to those who need them. It also helps to build trust between borrowers and lenders. 
  • To give priority to the development of the local economy. 
  • To encourage Islamic investments and savings. 
  • To help people save money and use it wisely. 
  • To help people build a strong relationship with their lenders.
  • To help people to achieve their financial goals.  

In Short Islamic Fintech is is very useful for the fast growth of the economy as it would facilitate especially SMEs and Micro businesses to scale up their businesses without too much documentation having everything digitally integrated in app that would fast the process of execution and transaction Standardization and transparent .Further it will increase financial inclusion and properly prudent documented of economy which eventually broaden the tax revenues for the country انشاءاللہ

Another big benefit of it would make the flow of capital towards mid and lower businesses than only towards very limited corporate finance and only few rich people. Which is again one of the objectives of Shari’ah that the wealth must not be concentrated in few hands.

For these reasons if attend towards islamic fintech model at large, it would be very useful for whole economy انشاءاللہ.

For further details please visit : Greensfin.com or Usmaniandco.com

Originally posted 2022-12-27 11:57:47.

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