Commodity Murabahah business from traditional Islamic financial institutions may have taken a hit due to the pandemic, but for broker Eiger Trading Advisors, this decline in transaction volume has been nullified by a surge in deals from fintech companies instead, underscoring a new market opportunity for commodity Murabahah brokers.
“Underlying business from our clients have drifted lower, and we’ve seen that from March onward although there is a recovery at the moment,” Stephen Openshaw, CEO and managing director of Eiger, tells IFN. “But having said that, there is an offset in those underlying volumes and transactions as we’ve been focusing intently on the automation of process, something we’ve been focusing on over the last five to six years.”
The firm’s years-long project to automate its processes is paying off as the Islamic financial industry has been catapulted into an aggressive digitalization phase triggered by the COVID-19 outbreak.
“With the onset of the pandemic, there has been a massive focus, especially within the GCC, in terms of fintech coming to disrupt the current market; and all the work we’ve done in the past to automate processes and transactions – both ours and our clients’ – have attracted a large number of fintech companies who want to work with us,” Openshaw explains.
Receiving encouraging demand from fintech companies, particularly from Bahrain, Saudi Arabia and Malaysia, Openshaw expects this offset (and growth) in transactions from these disruptors to continue over the next two to three years.
“Not all will succeed, but many [fintech companies] will do. And it is also creating a change in mood within traditional banking players that have been forced to compete with these companies and they can do that either organically or by acquisition and that’s where we may see change in a year or so,” observes Openshaw.