beyond shariah compliance
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Islamic Finance Intelligence Summit, London. Nov 5th, 2009
Beyond Shariah Compliance Leveraging Internet Technology to Bring Islamic Finance Towards Maqasid (Objectives) Al Shariah
The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.
Discussion Topics Beyond Shariah Compliance
1. Shariah Compliance Vs Maqasid Al Shariah 2. Achievement (Technology) To-date 3. Internet Technology Today 4. Embedding Internet Technology into Islamic
Finance 5. Conclusion
1. Shariah Compliance Vs Maqasid Al Shariah
• At contract level – Murabahah, ijarah, – mudharabah etc..
• Micro level • Minimum standard to be met;
otherwise contract is void or product is not accepted
• Standard set by various bodies – AAOIFI, Fiqh Academy,
Shariah Boards
Shariah Compliance
Source: Assoc. Prof Dr Engku Rabiah Adawiah, International Islamic Univ, Malaysia
1. Shariah Compliance Vs Maqasid Al Shariah
• Universal Values • Social order capable of
providing social justice along with economic prosperity
• Macro level • Optional but highly
recommended • No agreed standards among
scholars • Inner feeling
Maqasid Al Shariah The objective (Maqasid) of the Sharīah is to promote the well-being of all mankind, which
lies in safeguarding
their faith (dīn), their human self (nafs), their intellect (‘aql), their posterity (nasl) and their wealth (māl).
Whatever ensures the safeguard of these five serves public interest and is desirable.” (Chapra – Future of Economics – An Islamic Perspective, 2000 p.118)
According to Imam Al-Ghazāli
Maqasid (Objectives) Al Shariah Holistic view of Islam which has to be looked at as a whole not in parts
as Islam is a complete and integrated code of life and its goal encompasses the whole life, individual and society; in this world and the Hereafter.
Commitment of every individuals and organisations to justice, brotherhood and social welfare.
A society whereby every member will cooperate with each other rather than compete, as success in life is to obtain the ultimate happiness (falah).
Mere maximisation of profits cannot, therefore, be sufficient goal of a society.
Maximisation of output must be accompanied by efforts directed to ensure spiritual health at the inner core of human consciousness and justice and fair play at all levels of human interaction (muamalah)
Source: Abozaid & Dusuki - The Challenges of Realizing Maqasid al-Shari`ah in Islamic Banking and Finance
Challenges & Opportunities In Moving Towards Maqasid Al Shariah
• Hard to measure • No agreed standards • Higher risks and may not be in line with
“prudent banking” practices • May negatively impact bottom line in the
short to medium term • Shareholders/investors unwilling to
subscribe
Challenges
• technology is available to assist
• selective focus can be at the customer touch points
• some banks (conventional) have taken similar steps to present themselves are socially responsible banks
Opportunities
Discussion Topics Beyond Shariah Compliance
1. Shariah Compliance Vs Maqasid Al Shariah 2. Achievement (Technology) To-date 3. Internet Technology Today 4. Embedding Internet Technology into Islamic
Finance 5. Conclusion
2. Achievement (Technology) To-date
Focus on Shariah compliance Core banking Risk management Asset management Wealth management Internet banking Mobile banking Financing Origination Collection
Pattern proprietary
secure
robust
limited disclosure
scalable
non-customer facing touch points
Current Technology Rests on Sound Foundation to Support Future Initiatives of Islamic Finance
Discussion Topics Beyond Shariah Compliance
1. Shariah Compliance Vs Maqasid Al Shariah 2. Achievement (Technology) To-date 3. Internet Technology Today 4. Embedding Internet Technology into Islamic
Finance 5. Conclusion
3. Internet Technology Today
Trend Largely free Available world-wide Transparent – full disclosure Encourages feedback Allows Reviews & Comments
by multiple parties Highly interactive Instant response Current information and data
available, along with full history
Tools Search engines
• Google/Yahoo/Bing Social Networks
• Facebook/Twitter/Myspace • LinkedIn (for business)
Instant Translation Google translate
(translate.google.com) Free Applications
Google apps Wikipedia Alert Services
Many Universal Values Are Embedded in Current Internet Technology
3. Internet Technology Today Example of Islamic Finance-oriented site islamic-finance-resources.blogspot.com
Discussion Topics Beyond Shariah Compliance
1. Shariah Compliance Vs Maqasid Al Shariah 2. Achievement (Technology) To-date 3. Internet Technology Today 4. Embedding Internet Technology into Islamic
Finance 5. Conclusion
4. Beyond Shariah Compliance Embedding Internet Technology Into Islamic Finance
Values Transparency Encourage
Investment/Savings Feedback &
Discussion Promote Learning/
Education
Example
Ubank of Australia Conventional Bank Service via direct
banking
4. Beyond Shariah Compliance Embedding Internet Technology Into Islamic Finance
Values Transparency Encourage Investment/
Savings Feedback & Discussion Promote Learning/
Education
Example Ubank of Australia Conventional Bank Service via direct
banking
4. Beyond Shariah Compliance Embedding Internet Technology Into Islamic Finance
Values Transparency Encourage
Investment/Savings Feedback &
Discussion Promote Learning/
Education
Example
Ubank of Australia Conventional Bank Service via direct
banking
4. Beyond Shariah Compliance Embedding Internet Technology Into Islamic Finance
Values Transparency Encourage
Investment/Savings Feedback &
Discussion Promote Learning/
Education
Example
Ubank of Australia Conventional Bank Service via direct
banking
4. Beyond Shariah Compliance Embedding Internet Technology Into Islamic Finance – The Solution
Values Transparency Encourage
Investment/Savings Feedback &
Discussion Promote Learning/
Education
Example
Ubank of Australia Conventional Bank Service via direct
banking
Discussion Topics Beyond Shariah Compliance
1. Shariah Compliance Vs Maqasid Al Shariah 2. Achievement (Technology) To-date 3. Internet Technology Today 4. Embedding Internet Technology into Islamic
Finance 5. Conclusion
Oracle FLEXCUBE Supporting the Islamic Banking
26
Islamic Investment Company of the
Gulf
26 © 2009 Oracle Corporation – Proprietary and Confidential
Conclusion Internet Technology offers Islamic Finance Industry to go
beyond Shariah Compliance and towards Maqasid Al Shariah
Benefits and Strengths of Islamic Finance Vs Conventional Finance become obvious when Maqasid Al Shariah becomes a more prominent feature in Islamic Finance.
Profits, God Willing, will come as Islamic Finance expands, together with Barakah … as we help fellow mankind when we conduct our business
Are you, Bankers, ready to take the challenge?
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