Tuesday, March 19, 2024
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Canadian tokenization platform in advanced stages of securing license

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IFN Fintech has learned that Canadian tokenization platform Al Mabrook Financial is in the “final stages” of securing a license in El Savador, just as it gained Shariah approval for its business model.

Launched in November 2022, the Halal tokenization platform had sought to secure an exempt market dealer license from the Canadian securities regulator as part of its growth strategy to bring Muslim-friendly blockchain-based funding and investment solutions to the North American market as we reported last year.

However, regulatory stumbling blocks and a protracted process, largely due to the absence of dedicated enabling policies according to CEO Fahad Siddiqui, and an invitation by the El Salvadoran authorities, have instead led the Ontarian firm to apply for a license in the Central American nation.

“As Mabrook approaches the final stages of securing its license, the platform is undergoing rigorous smart contract and cyber security certifications, set to be completed in the coming month,” confirmed Fahad. Mabrook’s internal Shariah board, led by Mufti Ismail Desai, recently issued a Fatwa approving the platform’s model.

El Savador has been a strong advocate for cryptocurrencies and tokenization, embracing the new technology with welcoming regulations and policies. In 2021, it became the first country in the world to recognize bitcoin as a legal tender.

While the El Salvadoran license application is ongoing, Mabrook is not giving up its goal of serving the Canadian market.

Fahad told IFN Fintech that the company is working toward setting up a joint venture or partnership with an existing securities company in Canada to be able to provide its service in the market, which is currently without any dedicated digital asset regulations nor regulator.

The start-up is also on the hunt for new partners. It recently partnered with MRHB Network to offer the latter’s 300,000 Sahal Wallet users access to invest in fractional real estate and other Shariah compliant businesses in Canada.

According to its roadmap, Mabrook intends to offer a security token, followed by commencing a Mudarabah-based staking and vesting app, completing a minimum viable product of the platform and launching the first project to co-invest with the community.

Islamic crowdfunding group sets up VC fund and accelerator program targeting Halal start-ups

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Start-up Funding Crowdfunding Investment Venture Capital Entrepreneurship Internet Business Technology Concept.

Malaysian Islamic crowdfunding group Ethis has unveiled HASAN, a venture capital (VC) and accelerator program designed to support Halal start-ups in Southeast Asia and the GCC.

HASAN is a reiteration of the group’s angel syndicate network which had invested in 15 start-ups and two funds. The VC now comprises of 300 limited partners, from whom it is currently securing an initial close of US$3 million. The target fund size is US$10 million.

“Reflecting on our journey, we noticed the struggles of other Islamic start-ups in getting funding and mentorship. While the industry thrived with innovation, institutional support was lacking,” Umar Munshi, the co-founder of Ethis and managing partner of HASAN, shared with IFN Fintech.

Hoping to narrow the funding gap in the Islamic entrepreneurship segment, the HASAN VC—Accelerator intends to address the scarcity of Shariah compliant VCs, particularly with the emergence of what Umar termed as the “second wave” of Islamic start-ups.

Focusing on early-stage technology and tech-enabled Halal start-ups, HASAN will make equity investments in graduates of its eight-week online accelerator program. For the first cohort, 10 start-ups will be selected, and they will begin the program in May.

“HASAN prioritizes the nurturing of tech-driven Halal start-ups, emphasizing their potential for scalability,” Mohamad Akhtaar Abdul Ghani, the head of the accelerator and investor relations at HASAN, told IFN Fintech. “The sectors of focus encompass not only fintech but also lifestyle, health-tech, Insurtech, climate and sustainability among others.”

While Islamic-focused start-ups have been accepted into various accelerator programs globally, Halal-specific programs are far and few between. Securities Commission Malaysia’s FIKRA ACE is one example, although it aims to cultivate fintech solutions exclusively for the Shariah capital markets.

“With so many brilliant minds and founders out there, each bringing unique products and solutions to the table, the Halal tech start-up scene is truly exciting,” said Mohamad.

“Personally, I’m particularly intrigued by the fintech space. I’m eagerly looking forward to witnessing more innovation that nurtures the decentralized finance landscape. It’s an area that I believe holds immense potential for transformative growth,” Umar added.

Warba partners with Taskeen

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KUWAIT: Warba Bank has partnered with digital service provider for the rental property owners’ sector Taskeen Real Estate to provide real estate management services to its clients, according to a statement.

Taskeen’s services include property management, online rent collection, asset management, leasing, 24-hour maintenance, detailed reports and legal services.

Bank Muamalat Malaysia shifts to cloud-based model

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Kuala Lumpur, Malaysia - September 11, 2022: Kuala Lumpur city center in Malaysia and Petronas twin towers.

Bank Muamalat Malaysia, one of 16 fully-fledged Islamic banks in the country, has signed a collaboration with Google Cloud that is expected to speed up the bank’s transformation into a digital Islamic bank.

Under the collaboration, Google Cloud will be extending its capabilities in digital infrastructure, data analytics, security and generative artificial intelligence (AI) to develop Bank Muamalat’s digital banking services.

The bank is making a strategic shift to a cloud-based operating model, which involves migrating its applications and databases to Google Cloud, and integrating them with solutions from software and banking infrastructure company Mambu (which is also a Google Cloud industry solutions partner) and banking technology provider Backbase.

Bank Muamalat had adopted Mambu’s digital core banking platform and Backbase’s engagement banking platform to power its Islamic financing and deposit offerings.

These new initiatives, which have been approved by Bank Negara Malaysia, are expected to help increase the share of Islamic bank financing in Malaysia, which currently stands at 41% of total bank financing, read a statement.

The bank’s move toward digital banking is also expected to expand its reach to other segments of the Malaysian market, particularly the underserved.

“It’s our mission to bring digital banking’s full range of benefits to Malaysia’s Islamic banking market,” Khairul Kamarudin, the president and CEO of Bank Muamalat, said.

“By having our digital core systems and front-end running on Google Cloud, we anticipate streamlined IT operations and enhanced responsiveness, laying the foundation for innovation with enterprise-grade generative AI and ultimately delivering superior banking experiences.”

Malaysia’s digital banking landscape saw the entry of two Islamic neobanks licensed by the central bank, which has set a deadline of the end of March 2024 for their operational readiness. One of them — AEON Bank — already has a phased rollout scheduled for the first half of this year.

Digital banking services are expected to serve a big chunk of the Malaysian adult population; according to Moody’s Investors Service, over half of the population does not have full access to the banking system.

Rakeez Capital lands US$2 million investment

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Saudi Islamic fintech company Rakeez Capital has raised U$2 million in seed capital in a round led by Core Vision Investments. The start-up will use the funding to develop its debt and investment offerings including incorporating artificial intelligence (AI) into its solutions.

Rakeez Capital was launched in 2023 and in the same year secured Shariah certification for its automated Sukuk issuance platform. It is licensed by the Capital Market Authority to offer and invest in debt capital market instruments, specifically, it is authorized to issue and trade Sukuk Murabahah for retail and institutional investors.  

“These investments will greatly enhance our ability to develop and deliver innovative and reliable financial solutions to our clients, as well as advance advanced AI technologies to expand our customer base and explore more opportunities in the market,” shared Saeed Al-Ahmari, the co-founder and CEO of Rakeez Capital.

Saudi Arabia is one of the largest Sukuk issuers globally. At the end of Q3 2023, the Kingdom held a 28% market share of the US$823.4 billion global outstanding Sukuk, coming after only Malaysia which accounted for 40% of the market, according to Fitch Ratings.

Islamic Bank Australia gives up banking license as capital-raising challenge mounts

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The first, and only, fully-fledged Shariah compliant bank in Australia has surrendered its restricted banking license to the Australia Prudential Regulation Authority (APRA) due to struggles in raising the capital needed to maintain the hard-earned license, the neobank confirmed.

Islamic Bank Australia (IBA) made history in July 2022 when it secured the regulatory go-ahead to operate as Australia’s first Islamic bank, and a digital one at that. This had been an arduous and long journey for the challenger bank, over a decade in the making: it began engaging APRA in 2012 to navigate the Australian regulatory environment in the absence of a dedicated Islamic finance law. Throughout the years, the group — backed by the UAE’s Abreco Group — faced significant hurdles including a moratorium on new banking licenses in 2020 during the COVID-19 pandemic.

“We understand the anticipation and excitement surrounding the launch of the first Islamic bank in Australia. The journey thus far has been one of passion, dedication and unwavering commitment to providing Islamic financial services to our community. However, the current capital market conditions have proven to be exceptionally challenging at this stage of our endeavor,” IBA, now rebranded as Islamic Money, said. Only licensed entities can use the word ‘bank’ hence the new name.

Restricted deposit-taking institution licenses can only be held for two years prior to progressing toward an authorized deposit-taking institution (ADI) license. Restricted ADIs need to maintain a minimum capital of the higher of: AU$3 million (US$1.96 million) plus a resolution reserve, which is typically set at AU$1 million (US$653,544); or 20% of adjusted assets.

Islamic Money emphasized that it did not breach any licensing conditions. “As soon as it became apparent that a breach of capital requirements could not be avoided, APRA was notified and we voluntarily requested revocation of our license. This is in line with the ethical nature in which we run our business,” it said.

But this does not spell the end of the journey for Islamic Money.

“We are working hard to determine how we can continue this journey for the community and pursuing various options to enable us to raise the necessary capital to reapply for our banking license in future and become Australia’s first Islamic bank,” it said.

APRA confirmed in a statement that IBA’s decision to revoke its ADI license does not prejudice any future application it may make for a restricted ADI or ADI license.

At the time of revocation, IBA, which was acquired by Hejaz Group in June 2023, was still building and testing its products and systems; it had not launched any products nor accepted any deposits nor onboarded any customers.

IDLC adopts AbabilNG

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BANGLADESH: IDLC Finance has adopted Millennium Information Solution’s Islamic core banking solution AbabilNG, according to a LinkedIn post.

Mamun Ventures allocates funding

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GLOBAL: Mamun Ventures, the venture capital arm of Shariah compliant fintech start-up mamun, has allocated US$1 million in funding from its partners to invest in Shariah compliant start-ups in the MENA region, according to a LinkedIn post.

New Islamic digital bank to launch in the UAE

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ruya, a new digital Islamic community bank, is set to officially launch in the UAE market, aiming to be the first of its kind in the country.

The digital bank, which is licensed by the Central Bank of the UAE as a specialized bank under its official business/corporate name Ruya Islamic Community Bank, will be offering app-based Islamic banking products, including current and savings accounts and investment services. The bank’s website has opened its waitlist for those interested to sign up and try the app.

“Our user-friendly app will be paired with open-door branches that will serve as educational and collaborative community centers, fostering financial literacy and inclusivity,” shared Marwan Obaid Al Muheiri, the vice-chairman of the neobank.

The centers are designed as open house forums to encourage informal interactions between the bank, its community members and its customers. A dedicated community manager will lead each center or branch, with the primary role of facilitating the bank’s engagement with the local community.

ruya’s first community banking center and head office will be located in the Marsa area of the Ajman emirate.

“Choosing Ajman as our base from where we serve the whole UAE reflects our commitment to supporting vibrant and evolving communities. ruya embodies our values of ethical investment and social responsibility and we are confident it will have a positive impact on the UAE’s financial landscape,” said Naser Mohamed Almur Al Zaabi, the chairman of ruya.

The UAE has maintained a keen focus on fintech and the digitalization of its banking sector; at least three challenger banks have announced their plans to launch Islamic products. Zurich Capital Funds Group in 2021 announced the launch of RIZQ/Baraka, which would have been the first-ever fully digital Islamic bank in the UAE, but there has been no news on the neobank of late.

Abu Dhabi Islamic Bank and Dubai Islamic Bank meanwhile both run their own digital-only banking units.

AlinmaPay becomes Sukna Ventures’s limited partner

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SAUDI ARABIA: AlinmaPay, the fintech arm of Alinma Bank, has become Sukna Ventures’s limited partner and strategic partner, according to a LinkedIn post.