· mercycrowd, a uk-based real estate equity crowdfunding platform, is weighing between malaysia...

w w w . I F N F i n T e c h . c o m

JULY

2017

SECURITIESITIES

Merging business and charity: MercyCrowd to deliver greater social impact as business grows

Everex plans ICO to build Ethereum-powered Shariah compliant fi nancial capabilities

Asia welcomes maiden Islamic robo-advisor and looks forward to fi rst Shariah compliant artifi cial neural network

page 1• Everex plans ICO to build Ethereum-

powered Shariah compliant fi nancial capabilities

• Merging business and charity: MercyCrowd to deliver greater social impact as business grows

• Asia welcomes maiden Islamic robo-advisor and looks forward to fi rst Shariah compliant artifi cial neural network

page 3• Malaysia forms international

fi ntech partnership

page 6• Islamic non-bank fi nancial

institutions driving business with data analytics

• Islamic bank fi rst to adopt Visa Checkout service

page 7• Dubai backs Shariah compliant

payment service initiative• Alizz upgrades digital banking

service with overhauled app

page 8• Samsung pays the UAE a visit, and

is here to stay

page 9• Rise of the robots: Al Rajhi turns to

RPA to slash fraud risk and enhance effi ciency

• CompareAsiaGroup seals US$50 million Series B funding

page 10• IDB to harness the power of Islamic

fi ntech innovation with pioneering Fintech Islamic Finance Challenge

page 11• Dubai ups Islamic fi ntech game;

includes Shariah banks into accelerator program

page 12• Africa looks to Abu Dhabi to

nurture nascent Islamic fi ntech community

A conventional investment manager

gained fi rst-mover advantage in the Islamic

fi nance space by launching Asia’s fi rst Shariah

compliant robo-advisor and has begun work on

developing an artifi cial neural network trading

algorithm for the Islamic markets.

Farringdon Group has offi cially rolled out its Shariah compliant automated digital investment platform, Algebra, and is confi dent of onboarding a local partner to tap the domestic ringgit market before the end of the third quarter.

Restricted from dealing in local currency investments as Farringdon is regulated off shore by

the Labuan Financial Services Authority instead of Securities Commission Malaysia (SC), the group is nonetheless considering securing the necessary license from the SC as a means to enter the ringgit space.

“We are in discussions with our internal board about applying for the SC license before the end of the year – but we cannot guarantee it,” said Stuart Yeomans, CEO of Farringdon Group. “Honestly speaking, if we can partner up with good quality companies here, there will be no need – we will give them the engine to use.” – page 5

A blockchain start-up has so far raised

US$3 million from private investors and will

open its ICO to the public this month in the

hope of raising it to US$15 million to develop

microfi nancing services palatable to Muslims

and non-Muslims alike using Ethereum

technology and artifi cial intelligence (AI).

Everex is on a mission: it wants to enable the underbanked (some two billion individuals globally) of the developing world to access aff ordable fi nancial services anywhere in the world. Central to this mission are distributed ledger technology, mobile infrastructures and machine learning software. – page 2

MercyCrowd, a UK-based real estate equity

crowdfunding platform, is weighing between

Malaysia and Singapore as its gateway into the

Asian Shariah compliant and ethical investment

space, as part of its international expansion

strategy.

Going global

With a footprint in the UK and the UAE, the fi ntech start-up is looking at setting up shop in Asia over the next 12 months, CEO and founder Anouar Adham tells IFN Fintech. – page 4

2

w w w . I F N F i n T e c h . c o m REPORTS

But using Ethereum and AI to address the issue of fi nancial inclusion is only a small part of the overall equation, Jean-Baptiste Decorzent, Everex Global’s director of inclusive fi nance and strategic partnerships, tells IFN Fintech. “The issues our initiative is addressing are complex, but not complicated. We do believe this complexity could only be addressed by building strong partnerships.”

Incorporated last year, Everex initially focused on remittance services using its Cryptocash, which is not a new digital currency but rather a digitization of any existing national currency on the Ethereum blockchain. The idea is relatively new and Everex was among the fi rst to utilize such a concept (it was also one of the fi rst to build applications on Ethereum): Singapore only recently completed the fi rst phase in tokenizing its currency.

“About 18 months ago, the blockchain landscape was completely diff erent and a year ago, regulations on this hardly existed,” shared Decorzent. “We knew we were walking on eggshells because nobody had done it, but we needed to, and did it anyways.”

Designing the technology with migrant workers – who are generally unbanked – in mind, it was important to Everex to make the transfer of money cheaper, faster and more secure. Everex could not convince any regulators to come on board a year ago, and so, the start-up invested its own money into building the system and in September 2016, ran the fi rst pilot between Thailand and Myanmar which proved to be successful, transferring an aggregate amount of THB850,000 (US$24,975) for hundreds of migrant workers from Thailand to Myanmar. By using blockchain, the fi rm was able to slash the service fee by three times to 3% and decrease the transfer time signifi cantly.

For its groundbreaking work, the start-up was recognized for its innovation at the UN in New York recently. It has also been invited by the Bank of Bangkok to participate in a fi ntech program.

Microcredit

Now, the fi rm is focusing on microcredit. “Microfi nance institutions worldwide charge an average 35% interest rates on loans and in some cases it can go up to 50% - that to me is robbery. We want to drop that to 10%,” Decorzent said. He is, however, cognizant of the high cost incurred and great

risks undertaken by microfi nanciers which is why the start-up is now fundraising.

Previously raising US$3 million from 600 private investors in seven days, Everex will launch its ICO on the 24th June (capped at US$15 million). Proceeds will be used to develop AI, a crucial element in optimizing microfi nance as most clients would not have suffi cient fi nancial data or credit history.

“Through AI, individuals would be able to prove their line of credit through traditional fi nancial institutions and AI would also help build the risk profi le of borrowers,” Decorzent explained.

To close its ICO in August, development will commence soon after with a view to conducting its fi rst pilot project within six months. “Microloans are more complex as compared to remittance and realistically speaking, we should be able to launch the pilot project in February 2018,” said Decorzent.

Empowering women

In addition to microfi nance, the company is also currently working on an initiative to implement blockchain for livelihood and cash-based transfer (CBT), more specifi cally about facilitating women to access seed and capital for their ventures through ‘women entrepreneur impact funds’. These funds will allow women to access seed (grants) and capital (investments) for their ventures in emerging and frontier markets, empowering women to start/develop/re-start their business by facilitating them to access fi nancing – using Cryptocash.

“The plan is to establish a multi-stakeholders open-source blockchain Ethereum CBT and access to capital platform for multilateral organizations, public and private donor agencies, implementing agencies, fi nancial institutions and targeted population,” Decorzent expounded.

Shariah compliance

And of course, as an advocate for fi nancial inclusion, making all its off erings Shariah compliant is key. The fi rm has sought advice from an Islamic bank on its compliance.

“Everex intends to establish and maintain Shariah compliance during operations with Islamic customers.

Everex plans ICO to build Ethereum-powered Shariah compliant fi nancial capabilities (continued from page 1)

3


Malaysia forms international fi ntech partnershipOn a partnership spree, Australia has now sealed

a deal with one of the most ardent supporters of

Islamic fi ntech, opening the pathway for Malaysian and

Australian entities to be involved in cross-border projects.

Just as it has done with its colleagues in Hong Kong and Japan recently, the Australian Securities and Investments Commission (ASIC) has now partnered with Securities Commission Malaysia (SC) allowing the two regulators to leverage off each other’s fi ntech expertise and knowledge but more importantly, facilitate referrals of innovative businesses seeking to operate in one another’s jurisdiction. The latter also includes exploring potential joint innovation projects relating to the application of new technologies.

“International cooperation on fi ntech is essential,” Gred Medcraft, the chairman of ASIC, emphasized – the gravitas of the message was further underscored by real action by the Australian regulator which, over the last few months, has been strengthening its fi ntech presence in Asia Pacifi c by building bridges with multiple regional neighbors.

“This agreement will help local businesses grow

beyond our borders, and improve our understanding of fi ntech in the

region.”

Should both parties honor the terms of agreement set out in June, digital fi nance businesses from the respective jurisdictions have the opportunity to build scale and expand internationally. This also means that Shariah fi ntech fi rms in Malaysia would have greater access to the fl edgling Australian Islamic fi nance market. At the moment, the Australian Muslim minority is underserved by local fi nancial institutions, and there have been little developments on the Shariah compliant fi ntech side. This could potentially get the ball rolling.

Calling it an “important milestone” to Malaysia’s digital fi nance and fi ntech ambitions, SC Chairman Ranjit Ajit Singh

nonetheless noted: “Even as we continue to enable new forms of innovation in capital markets, we must not

lose sight of the need to manage digital risks, by taking a strategic approach to risk management, recruiting digital talent and improving IT architectures.”

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beyond our boand improve understandiof fi ntech in

region.”

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Among the methods slated to be used in compliance are fl at-rate lending smart contracts which align with [the] prevention of Riba Qard, growth due to interest outside the scope of an agreement and Riba Jahiliyyah, debt growth in response to defaulting on payments,” according to the start-up.

Securing an offi cial Shariah certifi cation is “most defi nitely” in Everex’s future plan. “We are not specialists in Islamic fi nance which is why we want to engage with industry experts and seek guidance on which is the best way forward.”

Changing future

At the moment, the initiatives are still under the umbrella of Everex; however, it is likely that they would be parked under a foundation due to the nature of the work which involves partnership with governments, private foundations, international organizations and multilateral development agencies such as the UN and the International Red Cross.

“Financial exclusion is a big challenge and nobody can do it alone. If we fail, we really do hope somebody else will be successful,” shared Decorzent.

4


“From the very beginning, we have always wanted MercyCrowd to be a truly international platform, and with offi ces in London and Dubai, we are the only Shariah compliant platform around that is as international as it can get,” Anouar believes. “And we expect to be present in Asia over the next year – the question is whether it is Malaysia or Singapore.”

Incorporated about a year ago, the young start-up only went live in May this year – spending the fi rst few months building its IT capabilities, forming its team and identifying and sourcing for quality assets.

“We wanted to do something unique and not be a mere copycat so we spent a lot of time trying to integrate unique features into our platform – being international is the underlying theme,” said Anouar.

This element of being global is refl ected across its business: apart from physical offi ce presence, MercyCrowd’s assets are also multinational in fl avor – it currently has assets from the UK and France on its platform. And the platform allows for transactions to be executed in more than one currency: the UK pound and the euro, with a view of including US dollars in the next few weeks.

Rigorous regulation

As expected, the international business model faces signifi cant regulatory hurdles: for every new market it forays into, MercyCrowd would need to be separately regulated by that specifi c jurisdiction.

“This is one of the reason why we began in the UK and made it a priority to secure a license from the Financial Conduct Authority,” Anouar explains. “By being regulated by the most stringent regulator around, it should ease our entry into other countries.”

Shariah spirit

Positioning itself as an ethical platform, it was important to Anouar, who has been an Islamic fi nance professional throughout his career, for MercyCrowd to be aligned with Shariah principles. All investments via the platform are conducted in an interest-free environment through a low-risk approach. And equally signifi cant (if not more), the platform facilitates socially responsible projects.

“A percentage of our profi ts goes to charity,” Anouar shares. “We partner with local associations where our assets are based, and investors also have an option to donate a portion of their returns to assisting these charities – which are dedicated toward addressing the issue of homelessness in their community, in line with the residential property nature of our business.”

To better facilitate donations on its platform, the crowdfunder designed a separate solution, Mercy Donations, which focuses exclusively on promoting local and sustainable projects. Another Shariah aspect vital to the platform is the democratization of investments.

“The minimum ticket to invest via MercyCrowd is GBP50 (US$64.33). To create an international real estate portfolio for just GBP50 is something no other Shariah compliant platforms are able to do yet,” says Anouar, whose Islamic fi nance credentials include stints in Shariah banking and asset management in the Middle East, Asia and Europe.

And while the fi rm has yet to secure an offi cial Shariah stamp for its platform, to Anouar there is “no question” about the Shariah compliance of MercyCrowd, which off ers debt-free (hence no Riba) low-risk investments in an asset class much favored by Islamic investors, promotes fi nancial inclusion and social equity as well as fosters the common good.

“What’s important to us is that we create social impact in every community we are in as we continue to grow as a business,” says Anouar.

Merging business and charity: MercyCrowd to deliver greater social impact as business grows (continued from page 1)

investors also have an option to donate a portion of their returns to assisting these charities

5


Asia welcomes maiden Islamic robo-advisor and looks forward to fi rst Shariah compliant artifi cial neural network (continued from page 1)

Making it aff ordable

About a year in the making, the main idea behind Algebra was to provide compelling investment returns at a signifi cantly lower cost to investors. While US-based Wahed Invest, the fi rst Islamic robo-advisor worldwide, keeps costs low by investing in cost-eff ective exchange-traded funds (ETFs), Algebra maintains price competitiveness (total expense ratio of 0.85% as opposed to the average 3-5%) by controlling expenses.

“As everything from start to end is done in-house, we have the advantage when it comes to pricing our product,” Yeomans told IFN Fintech. “However, I think the question is not how we are keeping costs low, but how much other asset managers are actually making from each investment.” The entire back offi ce and operations of Algebra, certifi ed Shariah compliant by Amanie Advisors, will be managed in Labuan.

Investment strategy

Martin Young, CEO of Singapore-based Farringdon Asset Management, who was greatly involved in the development of Algebra, shared: “We actually intended to follow a very similar model in the US but we were disappointed in the availability of investments in Southeast Asia as compared to the US and Europe. This is two-fold: one, the quality of investment available and two, the high charge involved.”

Depending on the risk profi le of individual investors, Algebra will draw up an investment portfolio built using equity as well as fi xed income instruments such as Sukuk and ETFs to manufacture a risk-weighted portfolio. For the equity portion, a smart beta strategy outperforming the Shariah S&P 500 index at a lower level of volatility is employed. At the moment, the investment universe of Algebra stands at 125.

“We have built the Shariah version of this platform and have also incorporated a non-Shariah option. Hence, whatever your investment profi le is, we can mold a portfolio around your investment principals and appetite for risk,” said Yeomans.

Unlike Wahed, which slashed the required minimum investment from US$7,500 to US$500, Farringdon on the other hand increased the minimum investment needed from US$200 (when it fi rst announced plans to launch Algebra in November 2016) to US$4,000 for one-time investment or US$325 per month.

White label the way to go

Recognizing that the entry point is

relatively expensive, Farringdon does intend to lower it at some point.

“We want to get to a point where a farmer in India can invest as little as US$10 because we think that’s where the market needs to be and really needs,” said Young.

India and Indonesia – the two largest Muslim nations globally – are the two main focus for Algebra at the moment, with the Middle East on the cards. The fi rm is also aggressively pushing to white-label its platform to Malaysian fi nancial institutions: it is currently in talks with four players and is confi dent of onboarding at least one by October.

ANN and VMF

For Yeomans and Young, Algebra is currently at about 70% of where it should be. The company is currently working on new technologies to enhance the robo-advisor. One of it is a Shariah compliant artifi cial neural network (ANN) to forecast the fi nancial markets and design optimum Islamic investing strategies, potentially a world’s fi rst, although it may be a while before this is rolled out as the company is still in the very early stages of development.

Designed to emulate certain signifi cant attributes in the functioning of the human brain, ANN is a trainable algorithm with the ability to learn from observing data sets and is used as a tool to predict fi nancial time series and most cost-eff ective or ideal solutions based on historical information.

In addition to that, the group has revealed a new investment asset class it termed as ‘virtual mutual funds’ (VMF), the technology of which it claims cuts out numerous layers of fees and allows the investors to directly hold securities while maintaining liquidity and performance.

“With VMF, we can set an algorithm to build a fund and blend it with fi xed income and Sukuk, allowing us to virtually roll into

any market in Asia without worrying about currency,” Young explained. “What we’ve observed is that Asian investors are more and more happy to invest in domestic currency and this

is where we will go over the next 12-18 months.”

Over the next 18 months, Farringdon also expects to launch a face-matching algorithm to increase the security robustness of its platform.

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6


Islamic bank fi rst to adopt Visa Checkout serviceThe largest Shariah bank in Qatar successfully

streamlined its cashless payment processes, signifi cantly

reducing transaction time while simultaneously boosting

its security features.

Qatar Islamic Bank (QIB) is now implementing Visa Checkout – a new payment option for online purchases and transactions available to its cardholders – in a bid to strengthen its hold on e-commerce-savvy customers.

“Online shopping has been growing signifi cantly in the last years, and we are aware that customer experience has become central to e-commerce and the shift of consumption to mobile made us think about a new and improved payment experience,” explained D Anand, the general manager of QIB’s personal banking group.

The new payment service overcomes a major issue faced by online shoppers: the seemingly unending (and

unnecessary) line of security and personal detail questions. From 44 fi elds, QIB has managed to slash the number of required fi elds to be completed by customers when performing an online payment, by over 95% to a mere two. This is done by, among others, eliminating the need for specifi c card details – these are replaced by a unique user ID and password.

Never been done before in Qatar, QIB is the fi rst to have adopted this solution which utilizes a set of propriety and advancement management tools to prevent fraud – an example of the tools is 3D Secure Technology, part of a service providing a password-protected authentication system to confi rm the cardholder’s identity every time the card is used online.

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A Saudi Islamic leasing company will apply

analytical modeling across its business to enhance its

decision-making process in the hopes of optimizing cost

effi ciency, maximizing revenues and managing risks

eff ectively as earnings take a dive.

Al Yusr Leasing & Financing has engaged Dubai-based Qarar to overhaul its existing customer credit evaluation process into an effi cient best practice risk decision-making process, driven by an advisory and data analytics program. Using data, Qarar will implement analytical modeling and recommend actions across multiple customer management

decision areas, particularly proactive customer cross and up-sell areas as

well as enhanced data-driven recovery strategies.

“We will be working together through a ‘Risk Program Partner

Approach’ to ensure that an effi cient origination process is successfully

implemented and that Al Yusr achieves maximum effi ciency and fulfi ls its credit management

objectives,” explained Zaid Kamhawi, CEO at Qarar, who emphasized that this is particularly important at a time when many Saudi fi nanciers are moving toward process automation and operational effi ciency.

Al Yusr’s adoption of a data-driven approach comes on the back of weaker earning capabilities: in 2016, the Shariah non-bank fi nancial institution experienced a painful drop of over 60% in net income from SAR222.79 million (US$59.37 million) in 2015 to SAR74.88 million (US$19.96 million) 12 months later.

The fi nance company said it hopes the new initiative would enable it to develop its growth plans and align its decision-making policies in a “progressive and sustainable” manner.

The leasing fi rm joins another Islamic fi nance provider, Bidaya Home Finance, in integrating a more systematic and analytical approach to business. Bidaya, backed by the Islamic Corporation for the Development of the Private Sector and the Public Investment Fund among others, earlier in May partnered with Qarar for its best practice credit risk advisory and analytical services.

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7


Dubai backs Shariah compliant payment service initiativeA global provider of digital payment services is

entering the UAE market with services agreeable to Shariah-

conscious customers.

Quisk Middle East has won the support of the Smart Dubai Government Establishment (SDG) in developing a suite of smart payment solutions allowing individuals to manage, save and make payments using phone numbers and secured PINs rather than card or bank account numbers. The service, also open to those with no bank accounts in the UAE, allows for a range of transactions including retail purchases, government services and bill payments as well as ATM withdrawals, e-commerce transfers and remittances.

To be implemented at all of Network International’s points of sale across the Emirates later in the

year, IFN Fintech has learned that the service is in compliance with Shariah laws and is restricted for some merchants such as dating services outlets and those involved

in gambling.

“The new payment system will help millions of fi nancial account holders in the Middle

East and North Africa region in general – and the Gulf region, in particular,” Samer Soliman, the executive vice-president of products and innovation at Network International, said. “Our goal is not only to consolidate the culture of digital money but to facilitate payments and all other payment services as well.”

Quisk accounts can be adapted to connect to any source of funds – other bank accounts, credit cards or digital wallets – and can securely complete payments without requiring the use of a smartphone application, data connection, mobile minutes or a charge. The initiative is backed by the Dubai government as part of its ambition of transforming itself into a smart city where residents are able to conduct daily tasks as seamlessly as possible with the help of technology and digital solutions.

“Launching the trial version of this new generation of smart payment solutions allows us to add another dimension to the smart payment experience, and brings us even closer to our goal of making Dubai the happiest city in the world,” explained Wesam Lootah, CEO of SDG. “One of the key features setting this platform apart from other similar products is its unprecedented fl exibility: users are free to use any device to avail the service. This path-breaking development opens the door for an entirely new concept of smart banking transactions.”

Alizz upgrades digital banking service with overhauled appAn Omani Islamic bank is hoping to capture the

younger population by redesigning its internet banking

platform and mobile banking application.

Alizz Islamic Bank, one of the two fully-fl edged Shariah banks in Oman, has unveiled a new mobile banking app and online banking interface, enhancing both the design and functionality.

The bank has incorporated a QR Code login system and expanded the range of transactions its mobile app can execute, including fund transfers and utility bill payments. The bilingual app (Arabic and English) is also 3D touch-enabled and off ers in-app notifi cations for new transactions and payment reminders – said to be the fi rst mobile banking platform to do so in the Sultanate.

“With an increasingly young population in Oman who prefer more

technologically advanced banking solutions, our wide range of cutting-edge digital banking solutions enable our customers to benefi t from more convenient and secure self-service channels, 24 hours a day, seven days a week,” commented Sadiq Al Lawati, the head of digital and card business at Alizz Islamic.

The enhanced digital channels are but one of the various initiatives by the bank to improve its reach by

upgrading its digital systems as well as IT hardware, including interactive teller machines – which utilize video-based technology to conduct real-time transactions – introduced last year.

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8


Samsung pays the UAE a visit, and is here to stayThe UAE was the fi rst in the Middle East to embrace

Samsung Pay solutions as it chases its dreams of

becoming a cashless society by 2020, and banks are

taking it one step further.

RAKBANK, which off ers Shariah solutions through RAKislamic, was one of the six banks in the UAE to introduce contactless and cashless payment solutions through Samsung Pay back in April; but the bank beat its peers by being the fi rst not only in the UAE but in the entire Middle Eastern region to integrate the South Korean technology for its ATMs.

Implemented in partnership with Samsung Gulf Electronics, the digital solution allows RAKBANK’s customers to make cardless cash withdrawals from its ATMs using certain Samsung smartphones.

“Currently, RAKBANK is taking a phased-out approach and shall begin by targeting ATMs that have strong footfall in locations such as Dragon Mart 2, Wafi Mall and City Center Me’aisem. Soon, customers will be able to use Samsung Pay solutions on most of the bank’s ATM network,” said Peter England, the bank’s CEO.

Back in April, RAKBANK along with Mashreq, Emirates NBD, National Bank of Abu Dhabi, Abu Dhabi Commercial Bank and Standard Chartered (all of which cater to the Muslim market as well), were the fi rst banks in the region to adopt Samsung Pay – based on Near Field Communication and Magnetic Secure Transmission technologies, the highly secure service integrates fi ngerprint authentication, card tokenization and Samsung’s defense-grade mobile security platform, Samsung KNOX. The technology, however, is only applicable to Mastercard holders.

Samsung choosing the UAE as its fi rst Middle Eastern market to roll out its digital payment solution does not come as a surprise – the Emirates after all boasts the highest level of smartphone penetration in the world at 80.6%, according to Newzoo. Mastercard also identifi ed the UAE as among those most rapidly transforming away from being a predominantly cash-based society.

A key driver behind the UAE’s swift evolution is the steely determination by the government to promote electronic payments in support of a wider national agenda (Vision 2021). The government was the fi rst of its Arab neighbors to introduce an electronic payment system such as e-Dirham, a tool to facilitate the collection of revenues of governmental and non-governmental service fees in a safe and secure manner. Over AED2.5 billion (US$680.51 million)-worth of federal government revenue was collected through e-Dirham in the second quarter of 2017, up by over 25% year-on-year. The number of transactions conducted over the system also increased from 9.97 million at the end of June 2016 to 10.84 million 12 months later.

The UAE Banks Federation is also in the fi nal stages of forming Emirates Digital Wallet – jointly owned by 16 shareholding banks including the nation’s biggest Islamic banks such as Dubai Islamic Bank, Abu Dhabi Islamic Bank, Sharjah Islamic Bank and Al Hilal Bank – and is on track to introduce a society-wide cash transformation to digital.

According to Mastercard, 74% of consumer payments are still made on a cash basis, placing the UAE as a country just starting its cashless journey.

“However, with a Readiness score of 69, the UAE has eliminated many of the typical macroeconomic barriers of creating a cashless society,” noted Mastercard.

However, with a Readiness score of 69, the UAE has eliminated many of the typical macroeconomic barriers of creating a cashless society

9


Rise of the robots: Al Rajhi turns to RPA to slash fraud risk and enhance effi ciency

The world’s largest Islamic bank intends to optimize

business effi ciency by replacing manual labor with

Robotic Process Automation (RPA), a move which has

so far reduced the bank’s vulnerability to potential card

fraud cases by 70%.

In less than nine months since it fi rst began automating its banking operations, Al Rajhi Bank has increased the

number of automated operations by over 600% to over 60 segments including retail credit card,

customer care and banking. The Saudi bank now processes in excess of 15,000 transactions

daily under RPA, increasing productivity and effi ciency by

dramatically reducing the processing time and response time to customers’ requests

while simultaneously increasing accuracy and minimizing errors in transactions. Leaving everyday repetitive tasks to its robotic technology, the Islamic bank also managed to redirect its human resources to more value-added and customer-centric services.

The bank is currently working on doubling the usage of RPA before the end of December, COO Waleed Al Mogbel confi rmed.

Al Rajhi over the last year has aggressively pushed its fi ntech agenda: it was the fi rst in the Kingdom to integrate RPA in September 2016, and in May 2017, became the fi rst Saudi bank to conduct a cross-border money transfer using Ripple blockchain technology; it is now looking to scale up the utilization of distributed ledger technology across diff erent business lines, with a special focus on remittance (See IFN Fintech June Issue).

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A group of international investors, led by the World

Bank Group’s International Finance Corporation (IFC), has

poured US$50 million in Series B funding into an online

personal fi nance marketplace which will channel the

investment toward enhancing Islamic fi nancial literacy,

among others.

“Islamic fi nance is a key pillar in our content strategy and source of growth,” Mark Reijman, the co-founder and managing director of CompareHero.my, the Malaysian outfi t of CompareAsiaGroup, tells IFN Fintech.

Present in eight countries, CompareAsiaGroup is an online personal fi nance marketplace providing consumers with personal fi nance management tools and price comparisons of diff erent fi nancial products. The platform’s proposition is built on increasing the fi nancial literacy of the growing internet population through free fi nancial advice with the aim of facilitating informed decision-making when it comes to managing one’s fi nances.

“We defi nitely recognize the need to boost fi nancial literacy in Malaysia in general, but also the understanding of Islamic personal

fi nance products and specifi c Islamic fi nancial concepts such as Takaful and the prohibition of Gharar and Riba,” explained Reijman. “Some of our most popular articles on the blog are explanations on how Islamic credit cards and Islamic personal loans work.” Only one in three Malaysians is considered fi nancially literate, according to a World Bank and S&P study.

Backed by Goldman Sachs Investment Partners, the group won the buy-in of the likes of Alibaba Entrepreneurs Fund, SBI Group and H&Q Utrust as well as existing investors such as Nova Founders Capital, ACE & Company and Route 66 Ventures. Also signifi cantly, this round of funding was led by the World Bank’s IFC which is investing in technology

it believes is key in reaching the unbanked and underbanked.

“CompareHero.my leverages technology to increase pricing transparency for fi nancial products and improve fi nancial literacy. Our support for innovative fi ntech companies like CompareHero.my encourages disruptive

technologies and new business models that create markets for other private sector players to

engage,” said Vivek Pathak, the IFC’s regional director for East Asia and the Pacifi c.

CompareAsiaGroup seals US$50 million Series B funding

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10


Launching its fi rst Fintech Islamic Finance Challenge

this month, the IDB Group is seeking start-ups and

entrepreneurs with game-changing ideas in the hope

of creating a fi ntech ecosystem within the global Islamic

fi nance industry.

The Islamic multilateral fi nancier is providing opportunities to fi ve projects it thinks are able to translate an innovative idea into real-life settings delivering real and tangible impact in society. These fi ve fi nalists will be granted a sum of money as well as provided with a year-long mentorship program with a mentor from Spanish university IE Business School and an intensive four-day fi ntech bootcamp at IE in Madrid.

“We are here to listen to creative and innovative minds looking for solutions to improve the access to Islamic fi nancial services through technology and to those who are determined to contribute to a socially responsible development according to Islamic fi nance principles,” said the IDB.

Open to all interested parties based in any of the group’s 57-member countries, the IDB is taking a slightly diff erent approach toward Shariah fi ntech, opening the doors to fresh green start-ups with only ideas to show. It will then provide these companies with the guidance, expertise and support they need.

“Accommodation and transport for fi nalists and teachers (one representative for [each] project), facilitators’ fees, experts’ fees, team-building events, breakfast and lunch are included,” the IDB noted.

The Fintech Islamic Finance Challenge is among the latest initiatives by the supranational to promote technologically-based fi nancial solutions that contribute to a socially responsible development through an ethical and Shariah compliant manner; its private arm a few months ago revealed plans to set up an incubator for Shariah-friendly fi ntech start-ups (See IFN Fintech May Issue).

IDB to harness the power of Islamic fi ntech innovation with pioneering Fintech Islamic Finance Challenge

O t h e r R E D m o n e y p u b l i c a t i o n s

These fi ve fi nalists will be granted a sum of money as well as provided with a year-long mentorship program

11


Dubai ups Islamic fi ntech game; includes Shariah banks into accelerator program

UAE Islamic banks will have a hand in mentoring up-

and-coming Shariah fi ntech start-ups and shape Dubai’s

Islamic fi ntech agenda as the Emirates’s Shariah economy

incubator sets itself to work closely with Dubai’s fi ntech

accelerator program.

Reaffi rming its commitment to Islamic fi nance under its 2024 Strategy and in line with its digital fi nance ambitions, Dubai International Financial Center (DIFC) has formalized an MoU with the Dubai Islamic Economy Development Center (DIEDC) through which the global fi nancial hub makes it a priority to also nurture innovative Shariah compliant fi nancial technology.

Under the agreement, Islamic fi nance institutions such as Emirates Islamic, Dubai Islamic Bank and Abu Dhabi Islamic Bank will join DIFC’s FinTech Hive as mentors to innovators in the fi eld of Islamic fi ntech.

Finalists will also gain an insight into the Islamic fi nance industry through a dedicated event hosted for them during which these technopreneurs will be exposed to the impact of technology on this sector as part of Dubai and the wider region’s broader economic development.

“We are continuously investing in our world-class ecosystem at DIFC

and that includes an infrastructure that is compliant and in line with best practice for Islamic fi nance

institutions,” commented Arif Amiri, CEO of DIFC Authority,

who called the partnership an “important” and “progressive”

step for fi ntech for the Islamic economy and for FinTech

Hive.

Dubai is one of the few jurisdictions globally

to have explicitly vocalized its Islamic fi ntech hub aspirations – Malaysia, Bahrain and Abu Dhabi being the others; Bahrain last month formed its fi ntech regulatory sandbox and specifi cally outlined Shariah compliant fi ntech as an area of focus.

Worth approximately US$2 trillion and projected to almost double to US$3.5 trillion by 2021 (according to DIEDC), the

Islamic fi nance industry holds immense potential.

But as Abdulla Mohammed Al Awar, CEO of DIEDC, put it: “Within the maturing Islamic economy landscape, several segments still need

to be tapped. These include mobile banking and payment systems, as well as SME fi nancing. We are confi dent the FinTech Hive at DIFC will go a long way toward developing these high-potential segments, and are committed to supporting the accelerator program to guarantee its success.”

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We are continuously investing in our world-class ecosystem at DIFC and that includes an infrastructure that is compliant and in line with best practice for Islamic fi nance institutions

Arif Amiri

Abdulla Al Awar

12


Africa looks to Abu Dhabi to nurture nascent Islamic fi ntech community

An African social impact fi rm has signed an MoU with

Abu Dhabi Global Markets (ADGM) to foster growth for

fi ntech start-ups across the Middle East and Africa, with an

important focus on companies off ering Shariah compliant

solutions.

By partnering with the Abu Dhabi international fi nancial center, TechPreneur Africa has created a bridge between the two regions for fi ntech companies to access one another’s market. Under the agreement, African innovators would be able to apply to ADGM’s regulatory laboratory to test the viability of their fi ntech solutions as well as pivot off ADGM to

access other GCC markets and international jurisdictions for capital and regulatory

recognition. Conversely, ADGM’s GCC and global fi ntech companies would also gain the assistance of TechPreneur Africa to deploy their products in

Africa.

“We hope that through closer collaboration with like-minded fi ntech hubs, we are able to leverage the strengths and expertise of our markets to more

effi ciently address the needs of the industry and support economic growth and development in the region,” said Richard Teng, CEO of ADGM’s Financial Services Regulatory Authority. “This new partnership will open up new avenues and create opportunities for fi ntech fi rms in the Middle East and Africa looking to expand into each other’s markets.”

One of the reasons TechPreneur Africa is building this connection with one of the world’s most advanced Islamic fi nancial markets is to also leverage on the Emirates’s expertise and openness to Shariah compliant products to facilitate the growth of Islamic fi ntech start-ups. IFN Fintech understands that the Lagos-based organization has received signifi cant interest from technopreneurs to tap the Shariah compliant fi nancial market.

Africa is an emerging Islamic fi nance market with promising growth potential, and the ability to test Islamic fi ntech innovations in a regulatory-light environment with established Islamic fi nance infrastructure would facilitate the development and implementation of such solutions in the African market. This partnership will also open doors for Middle Eastern fi ntech providers to foray into the African region.

For many, the Islamic fi nance proposition is crucial in Africa’s drive toward a 30% fi nancial growth by 2020, a goal TechPreneur Africa CEO Bolaji Finnih is committed to supporting. A technopreneur himself, it comes as no surprise that developing the African fi ntech ecosystem is a major agenda for the social impact fi rm to democratize access to fi nancial services.

the Lagos-based organization has received signifi cant interest from technopreneurs to tap the Shariah compliant fi nancial market

ive

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jurisdictions recognition

and globaalso gainAfrica to

Africa.

Editor Vineeta Tan [email protected]

Senior Copy Editor Kenny Ng [email protected]

Business Development

ManagerEce Temel (UK) [email protected]

Business Development

Manager

Matt Gabriel

(Malaysia)[email protected]

Deputy Publisher &

Director

Geraldine Chan

(UAE)[email protected]

Senior Graphic Designer Eumir Shazwan [email protected]

Group Managing Editor Lauren McAughtry [email protected]

Managing Director Andrew Tebbutt [email protected]

Managing Director &

PublisherAndrew Morgan [email protected]

Published By:

MALAYSIA - Suite 22-06, 22nd Floor, Menara Tan & Tan, 207, Jalan Tun Razak, 50400 Kuala Lumpur, MalaysiaDUBAI - 3rd Floor, X2 Tower, Jumeirah Lake Towers (JLT), Jumeirah Bay, PO Box 126732, Dubai, UAELONDON - Level 1, Devonshire House, 1 Mayfair Place, London W1J 8AJ, United Kingdom

Richard Teng

Bolaji Finnih

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