Fintech, digital sukuk could spur Islamic finance growth in Middle East

Fintech companies and digital sukuk could be two key growth drivers of the global Islamic finance industry in the Middle East and North Africa in the coming years, according to a senior executive at the Standard & Poor’s rating agency.

The Gulf has seen a boom in funding for fintech startups, increasing by more than fourfold from $200 million in 2020 to $885 million in 2022.

In an interview with Al-Monitor, S&P’s global head of Islamic finance, Mohamed Damak, said, “Fintech could help in the Gulf where we see most of the growth coming in the payment and money transfer business and that comes down to the structure of the population, the amount of money that is being sent back home every year.”

Damak added that some companies in the region had tried to develop their offering to push digital sukuk, a new type of Islamic bond, which a world of increasing automation and digitalization could benefit from. While with a conventional sukuk, much of the documentation is done on paper, with digital sukuk, it is all done digitally.