The Islamic Development Bank Institute (IsDBI) has commenced a project to explore digital Islamic financial services through the postal network of member countries in a bid to enhance financial accessibility among the unbanked.
“Due to their expansive footprint and broad network coverage and their specialization in the collection and delivery of parcels, postal networks have the unique potential to leverage technology and integrate Islamic financial services to address the needs of underserved communities and those excluded from the formal financial system,” explained the IsDBI, which approved an Islamic finance grant for this study last year.
The project will examine the postal services market landscape and effective operational models. The IsDBI will conduct a pilot feasibility study to introduce digital postal Islamic financial services in IsDB member countries.
A potential model to be explored is the use of Murabahah: postal networks would enter a Murabahah contract with customers outside the banking system and finance the purchase of goods on their behalf. According to the IsDBI, this project, which combines digital solutions with Islamic finance, is aligned with the UN SDG 10 (reducing inequality) and UN SDG 9 (enhancing financial inclusion and innovation).
It is also in line with the IsDB Group’s green, resilient, inclusive and sustainable strategy as it supports the transformation of postal services, which is a key national infrastructure institution.
Postal banking is not a new concept. In fact, the first postal account was opened in 1861 when the UK’s post established a postal savings bank to encourage low-income individuals to save. Many countries from the US, Brazil and Italy to Indonesia, Vietnam and India have since followed suit. Today, local post offices in some countries, such as that of the UK, offer an extensive range of financial services including credit cards, current accounts, insurance products, personal financing and mortgages.
In 2021, Kinesis, a Shariah compliant monetary system, partnered with the postal services of Indonesia (Pos Indonesia) to launch PosGo Syariah, a physical gold-based digital Islamic product.