As the Islamic finance industry becomes even more competitive driven by fintech, incumbent financial institutions are compelled to become more creative in expanding their market share. A prominent trend gaining serious momentum is Islamic financial services providers forming strategic alliances with e-commerce platforms as well as other Halal digital platforms as a means to widen their distribution network and market outreach.
Bank Islam Malaysia is the latest in the global Islamic financial world to do so. The fully-fledged Shariah bank has inked an MoU with a homegrown Muslim lifestyle mobile app, TheNoor, under which Bank Islam will be the latter’s official bank. What this means is that the bank will be able to offer Islamic banking services including retail and SME financing as well as Takaful and card products through the platform.
Founded by celebrity entrepreneur Noor Neelofa Mohd Noor, who goes by the mononym Neelofa, the app – launched in January – focuses on Muslim lifestyle needs. It features prayer times, a Qibla finder, media player and Quranic verses translated into five languages. There is a bold ambition for it to be a comprehensive holistic digital ecosystem to meet Muslim needs including financing. This is where Bank Islam fits in the narrative, and it could be a lucrative one. Banking on Neelofa’s star power to drive the success of the app, the bank expects to attract 500,000 new customers over the next year through TheNoor.
Partnership between lifestyle apps and e-commerce sites with Islamic financial institutions is prominent theme in Indonesia which is using this as a key strategy to boost the level adoption of Shariah financial services. The Republic has approached Islamic fintech-mediated financial inclusion by creating a comprehensive digital marketplace surrounding the country’s major e-commerce platforms to serve its 260 million-strong population. Four out of five major e-commerce sites in Indonesia (including fintech unicorn Bukalapak and Tokopedia) have introduced Islamic marketplaces. This allows consumers to purchase Islamic financial products and make Shariah investments, which has resulted in significant participation in the Islamic capital market space by millennials.