This paper explores the use of FinTech-enabled crowdfunding platforms to integrate Islamic social finance instruments with other similar instruments to enhance sustainable community development. It introduces the Integrated Islamic Crowdfunding and Social Finance Framework (IICSF) to integrate zakah, waqf, sadaqah, and digital crowdfunding to strengthen financial inclusion, institutional transparency, community involvement and sustainable socio-economic development. This study adopts a qualitative research methodology based on document analysis of classical Islamic legal sources and modern literature in Islamic social finance, FinTech, digital philanthropy and sustainable development. The study adopts a conceptual and analytical approach that combines classic Islamic philanthropic principles with cutting-edge digital financial technologies and integrates fragmented streams of scholarship on these areas into an integrative framework. The study found that integrating Islamic social finance with digital crowdfunding may strengthen resource mobilisation, enhance financial transparency, improve efficiency and accountability, encourage donor participation, distribute charitable funds equitably. FinTech such as mobile payment systems, artificial intelligence, block-chain, smart contracts, and digital identification management can build accountability and minimize operational expenses and fraud, as well as restoring public confidence. IICSF creates a collaborative setting amongst financial and civic organisations, including Islamic finance institutions, waqf boards, zakah agencies, crowdfunding portals, regulators, FinTech companies, social entrepreneurs, and the local community. It can also facilitate the financing of poverty eradication, affordable housing and education programmes, access to healthcare, climate action, youth entrepreneurship, and social ventures, among others, and has the potential to contribute significantly to a more inclusive and sustainable community development. This study introduces for the first time the Integrated Islamic Crowdfunding and Social Finance Framework (IICSF) as a comprehensive conceptual model for the integration of Islamic social finance instruments of zakah, waqf, and sadaqah, with FinTech-enabled crowdfunding. The framework addresses how Islamic philanthropic organisations could utilize digital financial technologies to foster greater financial inclusion, improved institutional accountability and performance, community participation and accelerated development. The integrative framework provides a model for a modern Islamic social finance approach capable of meeting social needs of contemporary global societies.
Tag: Fintech
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Crowdfunding Meets Islamic Social Finance: Integrating Zakah, Waqf, Sadaqah, and FinTech for Sustainable Community Development
This paper explores the use of FinTech-enabled crowdfunding platforms to integrate Islamic social finance instruments with other similar instruments to enhance sustainable community development. It introduces the Integrated Islamic Crowdfunding and Social Finance Framework (IICSF) to integrate zakah, waqf, sadaqah, and digital crowdfunding to strengthen financial inclusion, institutional transparency, community involvement and sustainable socio-economic development. This study adopts a qualitative research methodology based on document analysis of classical Islamic legal sources and modern literature in Islamic social finance, FinTech, digital philanthropy and sustainable development. The study adopts a conceptual and analytical approach that combines classic Islamic philanthropic principles with cutting-edge digital financial technologies and integrates fragmented streams of scholarship on these areas into an integrative framework. The study found that integrating Islamic social finance with digital crowdfunding may strengthen resource mobilisation, enhance financial transparency, improve efficiency and accountability, encourage donor participation, distribute charitable funds equitably. FinTech such as mobile payment systems, artificial intelligence, block-chain, smart contracts, and digital identification management can build accountability and minimize operational expenses and fraud, as well as restoring public confidence. IICSF creates a collaborative setting amongst financial and civic organisations, including Islamic finance institutions, waqf boards, zakah agencies, crowdfunding portals, regulators, FinTech companies, social entrepreneurs, and the local community. It can also facilitate the financing of poverty eradication, affordable housing and education programmes, access to healthcare, climate action, youth entrepreneurship, and social ventures, among others, and has the potential to contribute significantly to a more inclusive and sustainable community development. This study introduces for the first time the Integrated Islamic Crowdfunding and Social Finance Framework (IICSF) as a comprehensive conceptual model for the integration of Islamic social finance instruments of zakah, waqf, and sadaqah, with FinTech-enabled crowdfunding. The framework addresses how Islamic philanthropic organisations could utilize digital financial technologies to foster greater financial inclusion, improved institutional accountability and performance, community participation and accelerated development. The integrative framework provides a model for a modern Islamic social finance approach capable of meeting social needs of contemporary global societies.
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Platform Banking: The way to the future for Islamic Banking
Islamic banking is entering the state of irrelevance, or impasse. Many countries adopting dual banking system are witnessing the growth of Islamic banking sector stagnating. Indonesia for instance is growing at single digit in 2017, much lower than its peak of 47% in 2011, or 15-20% in the last three years.
The growth of innovative finance such as peer to peer lending and crowd funding, better known for its platform as financial technology or fintech, is among the threat affecting Islamic banking.
Platform banking is the face of banking in the future. In essence, banks will not only a place for banking transactions, but also for other services provided by the bank and its partners. Such services may include financial services products like insurance, or even non-financial.
The concept of platform is introduced and used extensively today in e-commerce area, and increasingly by services companies.
Banking can offer itself as a platform for other services related to banking, such as property, restaurant, insurance, mutual funds, or other services such as retail or government services.
Platform banking has been introduced by several medium sized commercial banks in Japan, Korea, the United Kingdom, Swiss, Germany, and the United States.
This development is interesting to follow, as banking services cross borders and go beyond traditional banking services.
The main hurdle in offering non-banking services is regulatory, as banking is highly regulated and some of these products are considered risky to the reputation or security of the banks.
One of the ways to mitigate this is by creating a digital platform and investing adequately on security.
With the advancement of technology, this hurdle can be mitigated.
The other aspect that allows the application of platform concept in banking is banking attracts customers to be in one place, either physically in banking halls or virtually. This frequent visits or use of banking facilities is an important feature that are attractive to providers of other services or producers of goods that can be offered through banking platforms i.e. banking halls (its vicinity) and banking internet portal or platform.
Platform banking is essentially bringing the banking services back to its original function i.e. the place where communities trusted the priests as their bankers then.
It early days, communities deposit their money and valuables to the church or other religious establishment. Temples or churches, in the Middle Ages, were not only place of worship but also a place where people safekeep their possession when they are going for a long trip or pilgrimage. In a simplest sense, church was a platform.
In hindsight, may be it is time to reconsider banking, and particularly Islamic banking as a platform.
Source: https://www.linkedin.com/pulse/platform-banking-way-future-islamic-dr-luqyan-tamanni/