But with Islamic finance laws and standards that seem complicated at times, it may be difficult to quickly reach a definitive conclusion on whether or not the investment process is Shariah compliant.
From this standpoint, the sectors of Islamic finance and investment began to touch on technology, in an effort to facilitate procedures and attract young men.
According to the “Zoya” application for mobile phones specializing in this field, “Tesla”, for example, is the pioneer of American electric cars, compatible with the Islamic Sharia by 96%.
The application examines shares listed in the United States based on the standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions, which is one of several bodies that define Islamic finance standards.
Wahid Invest, a US-based online platform, also uses the same standards to help tens of thousands of people invest “ethically”.
Islamic funds are prohibited from investing in companies linked to tobacco, alcohol, pork, or gambling. It is also forbidden to earn interest as “usury”.
The Islamic banking sector hopes that modern platforms will open the door for young investors and a new segment of businessmen.
Mahdi Bin Sulaiman, the official in “One”, said that the religious texts specify two conditions for investment, namely, “that the work has a real economic impact and not just speculation, and that it has a positive contribution in the world.”
Standard & Poor’s estimates the value of the Islamic finance sector at about $ 2 trillion, indicating that the sector will grow “slowly” in 2020 in estimates released before the start of the emerging Corona virus.
She said in the “Islamic Finance Prospects” report that financial technology can help the Islamic finance sector grow by “facilitating less complex and faster transactions.”
The repercussions of measures to curb the spread of the new Corona virus are raising concerns for this financial sector.
But Islamic financial products also attract non-Muslim people because they are low-risk and are based on dividing profits.
Last November, the Islamic Development Bank, in which 57 member states of the Organization of Islamic Cooperation participated, signed an agreement with Japan’s huge Public Pension Fund to develop sustainable products that comply with Islamic law.
However, Mohammed Al-Sahli, CEO of the Dubai-based financial technology company, Wathiq Capital, believes that the sector should focus more on “innovation”. “There is suffering in light of a lack of development,” he said.
IT may be the best solution.
At Vintage Hive in Dubai, young men and women were working in open spaces before the outbreak of the Coronavirus and the closure of duty stations. They sit on colored sandbags and have put laptops in their arms.
Raja Al Mazrouei, Executive Vice President, said: “We are connecting (startups) with the Dubai Center for the Development of Islamic Economy and we specialize in Sharia, Islamic banking and financial regulatory bodies.”
“If you are targeting countries like Malaysia, Indonesia and Saudi Arabia, then you should be able to provide a solution” that is compatible with Sharia, she added.
However, when entering the market, Islamic Ventic companies face many challenges that other non-Islamic companies may not face.
According to Al-Mazraei, a graduate of Harvard University, “traditional Ventic companies can present their idea around the world.” She explained that “the challenge for Ventic Islamic companies is to reach the regulatory bodies, as is done in Dubai, and to verify that all regulations have been tested and confirmed by specialists in Sharia.”