The adoption of blockchain, artificial intelligence, cryptocurrencies and other advanced technologies are expected to have a positive impact on the global Islamic finance sector and create new benefits and opportunities for banks and consumers alike, according to industry experts speaking at the Global Islamic Economy Summit 2018 (GIES) in Dubai.
Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, GIES 2018 is being organised under the theme “A Shared Future”, gathering over 3,000 key decision-makers, government officials, business leaders, and industry experts from around the world.
Joining a panel discussion entitled “The Islamic economy in a distributed, digitalised and decentralised world: Blockchains, cryptocurrencies, marketplaces and digital identities,” were Anthony Butler, Chief Technology Officer at IBM UAE; Dilip Rao, Global Head of Infrastructure Innovation at Ripple and Serhat Yildirim, Chief Digital Officer at Abu Dhabi Islamic Bank (ADIB).
Butler kicked off the discussion with an introduction to Blockchain technology. “We’ve always done business via ledgers,” he said. “Everyone maintains records on a ledger and then exchange messages and information. The issue is lack of trust among stakeholders; one bad player can affect the entire supply chain.”
“The system is vulnerable as it depends on paper,” Butler explained. “Blockchain, meanwhile, is a distributed digital ledger that everyone can view at the same time and make sure they are seeing the truth. It offers a consensus and allows each player to trace every item to the very beginning. Not to mention it offers immutability – whatever is written cannot be changed later,” he added.
For his part, Dilip Rao shed light on how advanced digital technologies align with Shariah concepts by ensuring greater transparency, allowing all stakeholders to know the underlying risks and assets beforehand is in line with the principles of Islamic finance.
“We want to create the Internet of value and remove friction from cross-border transactions,” Rao told the audience. He pointed to interoperability as key challenge of using Blockchain, revealing that Ripple has sought to solve the issue with an ‘interledger protocol’ that is now operated across numerous partners and connecting their various ledgers.
Lastly, ADIB’s Serhat Yildirim spoke of the opportunities that digital technologies such as blockchain and artificial intelligence can offer Islamic banks, as they can make banking more simple and accessible, and ensure ethical business behaviour.
“The impact of digital technologies comes from four dimensions: connectivity, automation, innovation, and decisioning,” Yildirim said. “They allow financial institutions – particularly Islamic banks – to acquire customers and cross-sell, drive efficiency, better engage with customers and enhance their experience.”
“We stick to Islamic principles, but we serve anyone asking for more transparency,” Yildrim added.
GIES 2018 is organised by the Dubai Chamber of Commerce and Industry and the Dubai Islamic Economy Development Centre (DIEDC) in cooperation with Thomson Reuters serving as a Strategic Partner.