Latest from GIFC

Thursday, 16 July 2009

Islamic Finance Market Requires Adaptability by Tech Vendors

The Islamic finance market, which has grown to $700 billion to $750 billion in assets, offers huge potential for technology vendors whose products can handle a diverse set of regulations, according to a report issued by research firm Celent.

“Because Islamic banking practices and regulations differ by region and country, key factors in a decision of which vendor to select are a solution’s flexibility and adaptability,” wrote Celent. “The core banking technology used by financial institutions is essential for meeting local customers’ needs; regulatory reporting, operational requirements and Shariah boards’ approvals.” Shariah refers to a code of law and conduct derived from principles set out in the central religious text of the Islamic faith, the Koran.

According to Celent, the largest growth potential for Islamic banking is in Turkey and Pakistan while Iran and Saudi Arabia are mature markets.

The Celent report evaluated nine Islamic banking software and service vendors: Infosys; International Turnkey Systems; Misys; Nucleus Software, Oracle, Path Solutions, SunGard; Tata Consultancy Services (TCS) and Tenemos. All of the technology solutions have multilingual and multicurrency functionality and accommodate the same Shariah-based products including Wadiah; Mudarabah; Murabahah; Musharakah; Ijara; Bai Salam; Istina’a and Sukuk. Of those Sukuk – debt contracts resembling Western-style securitizations – are the most popular.

Under Islam, interest is banned so Shariah-compliant products are often asset-based and share profits. Growth in the sector has been hampered by uncertainty over scholarly views on whether Islamic finance products truly comply with Shariah law and a lack of uniform interpretation which can make product development more expensive.

Shariah boards, which oversee adherence of financial practices to the Islamic code, are essential in the development of new products for banks and other institutions, according to the report. This can lengthen time to market for new products to be approved.

(Security Industry News)

Islamic finance links:
Islamic finance consulting and training (GlobalPro Consulting- Kuala Lumpur,Malaysia)
Islamic finance consultant and trainer (Ahmad Sanusi Husain-Kuala Lumpur,Malaysia)

No comments:

Upcoming Events on Islamic Finance, Wealth Management, Business, Management, Motivational Alfalah Consulting, KL-Malaysia: www.alfalahconsulting.com

ISLAMIC FINANCE EVENTS KUALA LUMPUR MALAYSIA

ISLAMIC FINANCE EVENTS KUALA LUMPUR MALAYSIA
Register Online . Register Today

Islamic Financial Planning & Wealth Management by Ahmad Sanusi Husain