Australian Islamic finance provider Hejaz Group has taken one step closer to its goal of offering a holistic range of products and services with its latest investment in the country’s lone fully-fledged Islamic bank.

The company closed a US$10 million investment in a strategic stake (of an undisclosed size) in Islamic Bank Australia (IBA), funded through internal capital. IBA’s CEO Dean Gillespie and other members of its executive leadership team will continue to helm the bank.

IBA had, in July last year, received a restricted authorized deposit-taking institution (ADI) permit from the Australian Prudential Regulation Authority to test their banking services on a select group of users for two years. The bank aims to complete the beta testing phase by the end of this year, and is on track to presenting their findings to the authority and hopefully be all-systems-ready for a July 2024 launch, according to Hejaz.

Meanwhile, Hejaz itself had, in 2021, started looking into the idea of applying for an Islamic banking license, but it will no longer be pursuing this and instead will lean into the partnership with IBA to offer a wider range of Islamic wealth and banking solutions.

Hejaz is also in the process of raising externally to fund its expansion efforts, including into overseas markets.

Muzzammil Dhedhy, the co-founder and COO of Hejaz, told IFN: “We were in Jakarta just last week, opening up our offices as we have just registered our business there; the Hejaz offering is now well and truly a multinational offering. It’s a huge market from an Islamic finance perspective — we have been speaking to various stakeholders and it looks very promising. We’ll be soon initiating a Hejaz proposition in Indonesia.”

The company has also set its eyes on expanding into the UK, having already approached UK regulators. “We find there’s a lot of consistency between Australian regulatory standards and the UK, and discussions are very positive and fruitful. We are confident that by the end of this year, or early next year, we will have an offering available in the UK as well, and it will likely be a joint offering between IBA and Hejaz’s respective propositions.”

Aside from expansion efforts, Hejaz is also busy preparing to launch its third exchange-traded fund (ETF) offering — a Sukuk ETF that it is working on very closely with the Australian Securities Exchange. The product should be available on the exchange within the next two months or so, Muzzammil confirmed.

The digital arm of one of Bahrain’s largest listed companies has entered the Islamic finance space, offering the Kingdom a mobile-only Islamic banking experience as it rides the fintech wave and broadens the growing Shariah digital bank community.

Known as alburaq, the Shariah compliant banking service is offered by ila Bank, the mobile-only retail banking arm of Bank ABC. ila Bank’s foray into Islamic finance comes after three years of serving the Bahraini market with conventional products since its launch in November 2019.

“By introducing this purely Islamic account from ila, we endeavor to offer Bahrain an all-inclusive banking experience that caters to the country’s diverse market, with a wide range of banking products that meet varying customer preferences, enabling us to further bolster financial inclusion in the country,” explained Bank ABC’s acting group CEO, Sael Al Waary.

Completely segregated from ila’s conventional accounts, alburaq’s range of products, which are backed by Bank ABC Islamic, include multicurrency accounts, debit cards and payment and remittance services. Customers of alburaq will also have exclusive access to a Wakalah investment product, available in the Bahraini dinar and US dollar. Onboarding of new customers is done completely via the ila mobile app, which also allows existing ila users to switch to alburaq.

ila’s move is in lockstep with a wider trend seen in the Kingdom as well as the region and beyond of incumbent financial institutions entering the Islamic digital finance space with a dedicated unit. alburaq joins meem, the digital Islamic retail banking arm of Gulf International Bank, in offering Halal banking services in Bahrain on an exclusively mobile/digital basis, while traditional banks such as Bank Islam Malaysia, Al Rajhi Bank Malaysia and Bank of London and The Middle East have also launched their digital-only propositions.

According to the IFN Islamic Fintech Landscape, there are at least 25 Islamic digital bank start-ups/platforms globally as at the 17^th May 2023.