Source: Islamic Markets
New research shows that most leading Islamic finance professionals expect the sector to move rapidly towards greater use of open banking over the next three years.
The research was conducted by IslamicMarkets.com, a leading platform that provides access to expert knowledge and financial opportunities, to support the Global Islamic Finance Forum 2022 (GIFF2022) that takes place next month.
The study found that 90 per cent of Islamic finance professionals believe the adoption of open banking by financial institutions, Governments, fintechs and other stakeholders will increase by 2025, with nearly two out of five (38 per cent) expecting a dramatic rise in adoption. Growth of open banking in Islamic finance will partly be driven by more and better regulations, the study also found. Almost a third (32 per cent) of Islamic finance professionals who were questioned predicted a dramatic increase in regulation, with another 59 per cent forecasting a slight increase in regulation.
The study found that Islamic finance professionals working across a wide range of sectors believe open banking will mean greater use of fintech innovations in Islamic finance such as Waqf, Zakat and Sadaqah. More than half (62 per cent) questioned, strongly agree open APIs will enable the platforms to access customer accounts in Islamic finance, with the result that customers can make contributions through the platforms. Another 30 per cent slightly agree.
Islamic finance professionals believe that the key benefit of open banking in the Islamic finance industry is to meet strong customer demand and offer more choice with the ability of banks to offer more innovative products. Other benefits include being able to manage the escalating costs of launching new digital services at scale and developing strategies to monetise customer data to generate new revenue streams. The growth of open banking will also enable institutions to meet regulatory requirements to provide higher transparency for reporting data.