With over two decades in the business of banking and finance technology, Millennium Information Solution (MISL) has built a reputation in the Islamic finance space, scaling up from humble beginnings in Bangladesh to a global presence now through its new office in Dubai. Armed with an aggressive growth strategy and a new international office, the tech company is showing no signs of slowing down as it takes on the global stage, highlighting Africa, CIS and Indonesia as lands brimming with Islamic fintech opportunities. IFN Fintech speaks to Managing Director and CEO Mahmud Hossain to find out more about the firm’s expansion plans and to gain his insights into the Islamic fintech and digital banking landscape.
MISL is present in several markets — which, to you, are the most interesting when it comes to Islamic fintech and digital opportunities? Why?
Our flagship product is Ababil, a comprehensive suite of Islamic fintech solutions, which not only includes Islamic core banking solutions but also trade finance, treasury, remittance, agent banking, microfinance, digital customer onboarding along with a mobile application and internet-based banking. These products are targeted toward regions of the mass unbanked population in order to expand financial inclusion in those particular regions. Our solutions provide exceptional value, making it extremely cost-effective to implement and serve these communities.
So naturally, the continent of Africa is by far the most suited for these products. Not only does this create an opportunity for financial inclusion, but it also serves the core purpose of our existence. Our slogan is “upholding social equity and justice” which is also in line with the UN Sustainable Development Goals, sharing the same objectives such as zero hunger, eradicating poverty and improving quality of work and life, to name a few. Furthermore, bringing people under the financial umbrella has not been explicitly defined as a development goal by the UN but various research shows that it is a very effective means to achieving them.
With all of that in mind, we also find the CIS region and the Indonesian market as the more prospective markets, especially due to their rich culture, liberal stance, social protection schemes and inclusive nature. Popularizing Islamic fintech in these markets makes it easier for a true global implementation of Islamic finance.
You mentioned Africa and CIS as key focus areas. Any specific markets in Africa or CIS? Any progress made so far? These are high potential emerging Islamic finance countries but are also relatively small when it comes to Islamic finance and they generally lack the right infrastructure. How challenging would it be and how are you overcoming such challenges?
We have received a letter of intent from Kazakhstan — Alhamdulillah. We also had a schedule for seminars with our partners in Tajikistan and Uzbekistan, but these did not materialize because of the [coronavirus] pandemic. On the other hand, we have also visited our prospective client base and had a seminar in Ethiopia where we see great prospects for our products and services.
The reason being we have core Islamic banking, mobile banking, agent banking as well as microfinance solutions — all are essential there and we have all of them running in an integrated fashion in several banks of similar countries, meaning solid and field-tested systems. There are several emerging new upcoming Islamic banks in Ethiopia, and we have met almost all of them. We are also targeting Kenya through our partners there.
Can you elaborate on the kind of digital and fintech opportunities you see for emerging markets?
I believe digital financial payment products like a mobile phone linked to a bank account will allow people to get money from far-flung relatives and friends in a crisis, reducing the odds they will fall into poverty. There is growing evidence that digitizing payments like for health, education or other social safety nets yields big benefits for individuals, in addition to improving efficiency for governments and aid agencies by reducing transaction costs and leakage.
Digital platforms such as mobile financial services, microfinance and agent banking are booming. Gradually, mobile payment will become a preferred choice by both consumers and merchants alike. Digitalization of the financial industry lowers operational costs when compared to manual processing and also makes it easier to develop, implement and manage these fintech platforms. True financial inclusion is taking place in the unbanked population through these processes.
As far as supply chain management is concerned, I believe it consists of four core elements — purchasing, production, inventory management, and transportation and distribution — each of which can benefit from digitization in terms of planning, operation management, process automation and decision by adapting big data analysis and AI [artificial intelligence] technology, and in turn, achieving a greater degree of cost effectiveness and efficiency.
While digitization makes some jobs obsolete, it makes up by creating new opportunities. Again, the opportunities here are infinite. Moreover, digitalization will allow families to have a second earning member while staying home by virtue of work-from-home opportunities through digital platforms. The chance to work from home or any part of the world gives individuals a chance to enhance their standard of living while maintaining a work/life balance. Big organizations and governments as well as banks are going to need integrated HRMS [human resources management systems] to run their institutions efficiently through including e-recruitment, talent development, training management, payroll with complex taxation management, attendance and leave management, performance management, etc, with a mobile interface for almost all the modules and we already offer a solution that have all the features integrated into the system (we have that integrated solution as well).
Most importantly, we see digital technology as a medium to account for the universal population in ensuring their basic rights and necessities such as the scope for universal welfare, pension, healthcare and insurance, among others. Establishing social protection and development also falls under the spectrum of our vision of “upholding social equity and justice.”
In the markets you are in, are regulators and incumbents fully open to the idea of fintech and digitalization? What are some of the efforts being implemented to that end? What do you think is needed in the ecosystem to facilitate a conducive digital environment for Islamic financial institutions?
It happened initially, but now they have become more accommodative especially since more new Islamic windows are emerging and new conversions from conventional to Islamic banks are taking place. If we take blockchain technology as an example of fintech, the idea of blockchain technology — which was supposed to bring a paradigm shift in the financial industry including in the areas of cross-border payment systems and trade finance and which could be well suited for Islamic banking with its conditional contracts execution — is still under question by regulatory authorities and adoption is very slow in these parts of the world.
We are continuously maintaining relationships with regulatory authorities through official and personal channels as we position ourselves as an enabler for implementing macroeconomic objectives. Learning, communication and awareness are the three essentials in continuous development and maintenance of the Islamic financial ecosystem.
Apart from potential regulatory pushback, what are some of the biggest hurdles when it comes to fintegration for Shariah banks? What challenges or pain points should Islamic banks be aware of and how can they over them in order to ensure a seamless yet effective digital strategy?
Culture, resistance to change, fear.
As you know, we are living in a culture very resistant to change and as we all know, human beings, innately, always had a great fear of the unknown. However, most great human advancements, both in terms of science and technology, had to face these hurdles over the course of time.
Hence, we will require stakeholders at all levels to be more tech-savvy, with an attitude to not only accept changes but also patronize them, keeping a mindset of foregoing immediate short-term profit in favor of long-term sustainable profit from the mass market.
MISL has built a reputable business over the last 20 years, servicing clients from all over the world from its home base Bangladesh. Last year, it inaugurated its office in Dubai. Why Dubai and why now?
Dubai is a well-respected and widely regarded Islamic finance hub, making it an ideal gateway into the markets we are targeting — Africa, Indonesia and the CIS region. Moreover, we get fantastic infrastructure in Dubai to provide global support — which is one of the main drivers of us expanding our physical presence to Dubai; we want to reach our global customers to better support them and address their needs more efficiently and effectively and this can be achieved from our global headquarters in Dubai. Although we have partners and we are also in the process of engaging more partners in these regions, since we have direct flights to these countries from the UAE by several airlines, we would require much less travel time to reach our clients and would be able to address their needs much faster.
What projects is MISL working on? Any expansion/partnership plans? What can we expect from the company over the next 12 months?
MISL has three flagship products — Ababil, Sylvia and Tahqiq. Ababil is our Islamic banking product suite, Sylvia is the HRMS product suite and Tahqiq is for the Risk-Based Internal Audit System. Our next 12-month plan is to successfully implement the orders in hand and materialize the ones in the pipeline for these products, while ensuring absolute client satisfaction.
Since our entire new-generation Ababil was built leveraging the strength of Java micro services and the Apache Kafka distributed streaming platform, we have now been easily incorporating AI in selected areas of this product.
We have started leveraging the power of AI and machine learning through proper incorporation of them in all our three product lines as well. We are also exploring through R & D [research and development] the blockchain technology, so that we are not behind in leveraging the benefit of this technology when the regulator starts allowing it to apply in trade finance and cross-border fund transfer.
We are continuously developing these products to not only meet contemporary needs but also forecast the realities of the near future. Our vision with these products is to perpetually attain universal excellence in their respective domain. These are:
1. Ababil: Universal financial inclusion
2. Sylvia: Universal social inclusion, and
3. Tahqiq: Universal risk assessment and internal audit.
While our reality is not a utopia, we are determined to put our best effort in the present for ensuring the best future for our descendants. Inshaa Allah, Ameen.