A Dubai-based fintech start-up is developing Shariah compliant proprietary technology targeting the Muslim Gen Y market banks want to tap.
For the team behind Monami Tech, it was an easy decision from the get-go to tap the Muslim market of the Middle East with Shariah compliant solutions. For starters, there was a gap in the quality of financial services being offered in the Middle East as compared to the US and Europe. The gap is even more apparent within the Islamic financial services space.
“We understand fintechs have acted as disruptors in the economy but we believe working and partnering with banks is the way forward,” COO Nimmer Khokhar tells IFN Fintech. “We believe that we should focus on helping financial institutions progress. Wahed was essentially born out of that idea – especially since conventional banks are moving toward financial innovation, but Islamic financial institutions are not.”
Muslim millennial money
Wahed, which means ‘one’ in Arabic, is a mobile app currently under development and can be described as a Shariah compliant personal finance management tool. From spending analysis, expense tracking budgeting and bill payments, the app also allows for Zakat calculations, peer-to-peer transfers and integrates a charitable donation component, through which users can donate to a charity of their choice across the Muslim world.
“We’ve seen strong interest from Islamic banks in the UAE because there is a lack of products out there that target the millennials,” Adriana Bickford, the firm’s vice-president of marketing, shares with IFN Fintech. “From our research, we’ve found that the older generation of Muslims are generally very loyal to their banks and would like for their children to bank with the same institutions; however, the younger generation, or millennials, do not see the same value in banking with the same institutions – banks are not able to capture the legacy.”
Monami Tech intends to bring Wahed to the GCC market; however, the product may first be launched in Southeast Asia instead.
“We’ve been in discussions with banks in Southeast Asia – Malaysia, Indonesia and Brunei. It seems that the environment there may be more adaptable and more open to adopt this product much quicker,” explains Nimmer, noting that it is taking a little longer than expected to bring the product to market due to regulations and restrictions in the GCC. “If Wahed is successfully launched in Southeast Asia, we will then bring it back here to the GCC.”
More than millennials
Wahed is not the only initiative Monami Tech is working on: the firm expects to launch a new platform in the next 10 weeks. Known as Lendme, the platform supports collateralized consumer goods purchasing by connecting financial institutions to provide immediate financing to individuals purchasing products at any stores, serving as an alternative to credit cards. Both Islamic and conventional options would be available as the company will partner with Shariah and conventional banks.
This technology could potentially open up fresh revenue streams for banks.
The question is, how do you streamline the process? At the moment, the firm is collaborating with other fintech companies to create a sophisticated application using data-mapping features and artificial intelligence allowing automated approval and rejection of financing applications.
“We are targeting those between the ages of 24-50 years old, living in Dubai and employed, as well as with a certain spending power and in a situation of moving or looking to upgrade from their existing lifestyle,” said Nimmer, who was attached to an Islamic finance consultancy firm previously.
Asked if the operating environment in the GCC is conducive for fintech, Nimmer thinks so, revealing that the company is right at the cusp of working with regulators and understanding how it should move forward. He adds that it has nonetheless been challenging as the regulatory climate is stringent although it is certainly opening up every quarter as authorities issue new rules allowing for new products to be brought into the market.
“It is not only understanding our clients but also understanding the wave of digitization impacting the region. And those who have been involved with fintechs in the past few years will be most digitally savvy and have a better chance of riding this wave,” Nimmer believes.