Australia’s Hejaz Financial Services has signed a three-year agreement with GBST Digital through which the latter will provide a suite of nine online calculators, powered by the technology firm’s Equate technology and backed by Equate’s content management solution. This is GBST’s first Islamic finance client.
In a bid to boost retail participation in the capital market, the Securities and Exchange Commission of Pakistan (SECP) is banking on digital asset management companies (AMCs) to bridge the chasm. To this end, the regulator has released a concept note outlining the role of digital AMCs.
Defining digital AMC as a licensed non-banking finance company (NBFC) offering asset management services digitally, the SECP would allow existing AMCs to convert themselves completely into a digital AMC in addition to welcoming new NBFCs.
To grow this space, the regulator has lowered the barrier to entry, proposing a minimum equity requirement of PKR50 million (US$219,198) instead of PKR200 million (US$876,790) as required of conventional AMCs. Digital AMCs will be allowed to provide all conventional services including launching collective investment schemes, online account opening as well as redemption of units and inter CIS conversions through digital means, removing physical interaction altogether.
This concept note is the SECP’s latest effort in a string of measures to promote digital asset management services as it sees technology-enabled avenues as key to financial inclusion.
It already issued guidelines for mutual fund digital distribution platforms and welcomed four of such platforms. The SECP also outlined specifications pertaining to digital account opening by AMCs and digital distribution platforms to promote digital onboarding of mutual fund investors. Since then, AMCs have attracted some PKR325 million (US$1.42 million) in investment through digital onboarding.
Pakistan’s mutual fund investor base is described by the SECP as “under-penetrated”. There are approximately 320,000 investors in mutual funds, or a mere 0.14% of its population, served by the 21 AMCs in the country which collectively manages some PKR1.2 trillion in assets. The number is dismal compared with neighboring India which has over 18.5 million mutual fund investors, or about 1.33% of its total population.
“In order to encourage growth, competition and innovation in the sector, there is a strong case for leveraging technology in an effort to expand financial access to grassroot level,” noted the SECP. The regulator is pursuing a “completely digital asset management ecosystem” comprising mutual fund distribution platforms, digital investment advisors and digital asset management companies.
“The development of a complete digital ecosystem will cater to the needs and expectations of the younger generation who are more tech-savvy and prefer digital investment platforms,” the SECP believes. “With continuous facilitation and engagement, this evolution will encourage prospective investors to enter a space with a promising future and should also promote healthy competition among asset management service providers leading to improved customer service, product offerings and return on investment.
Pakistan has a thriving Islamic asset management sector. As at the end of June 2022, Shariah compliant assets account for 28.9% of total industry assets which stood at PKR2.17 trillion (US$9.51 billion).
UK-based Islamic fintech start-up Kestrl will be developing and implementing personal finance management (PFM) features for Bank Islam Malaysia’s new digital bank proposition, Be U, broadening Kestrl’s remit from being a consumer app offering into a software-as-a-service provider.
Kestrl, founded in 2019, provides Shariah compliant personal finance management services, applying machine learning and behavioral science to users’ transaction data to create a monthly budget, automatic savings, and personalized investment/savings recommendations. Primarily serving the UK market, its partnership with Bank Islam would see the Islamic fintech start-up foray into Malaysia.
“We are extremely excited to be partnering with as forward thinking an organization as Bank Islam to develop its digital bank. Offering personalized solutions to Muslims without them feeling they’ve had to compromise is at the heart of Kestrl’s values, and we look forward to applying our existing PFM tools, as well as developing some new features for the Malaysian market, to build a truly differentiated offering for the bank,” said Areeb Siddiqui, CEO of Kestrl.
Bank Islam launched Be U in July. It is touted as Malaysia’s first digital bank built natively on the cloud. Eyeing to diversify its revenue streams by tapping new market segments with the digital offering, Bank Islam expects to build a user base of at least 350,000 for its Be U app over the next 12 months. The PFM offering, slated to be introduced by the end of this year, is targeted at attracting younger, digitally savvy customers.
The Be U digital bank comes at a time when Bank Negara Malaysia extended five digital bank licenses to different entities, including KAF Investment and AEON which are both intending to serve the Malaysian market on a fully Shariah compliant proposition.
Singapore-based EZ Wage has signed an agreement with Bank Alfalah to act as its digital payments partner to facilitate earned wage access in Pakistan, a statement confirmed. EZ Wage is a mobile app that allows employees to withdraw a portion of their salary before their scheduled payday. Through the partnership, EZ Wage will route payments in real time to users through the bank’s platform.
The Securities Commission Malaysia (SC) is seeking the public’s feedback on a proposed regulatory framework relating to the management of technology risks by capital market entities.
The framework aims to boost capital market entities’ ability and effectiveness in detecting and addressing an increasing range of technology risks due to the prevalent use of technology, emergence of new technologies and the growing sophistication of cyber threats.
The proposed framework essentially covers governance requirements and requirements on technology risks management, technology operations, technology outsourcing, cyber security and data management as well as principles relating to the adoption of artificial intelligence (AI) and machine learning (ML).
“The Malaysian capital market’s technology landscape has progressed rapidly in recent years and embracing technology is critical for an inclusive and efficient capital market. While technology is a key enabler, its widespread use and rapid adoption can pose risks in many different areas if not properly managed,” the SC said.
This proposed framework, in line with the regulator’s Capital Market Masterplan 3, is expected to subsume the current requirements in the SC’s 2016 cyber risk guidelines, consolidate other requirements relating to technology risks management in the various guidelines issued by the SC as well as introduce new requirements.
The SC is collecting feedback on the consultation paper until the 19th September 2022.
Pakistan Stock Exchange (PSX) and fully-fledged Islamic bank Meezan Bank have collaborated to establish a new, dedicated trading platform catering to Islamic banks’ clients that hold Roshan Digital Accounts (RDAs) — an investment solution for non-resident Pakistanis.
The new platform will be available through the exchange’s Karachi Internet Trading System (KiTS) and will facilitate any RDA client of an Islamic bank focused on investing in Shariah compliant securities, through the services of over 100 securities brokers and trading right entitlement certificate (TREC) holders that use KiTS as an order management system.
Meezan Bank developed the criteria for investing on the new Shariah compliant platform and vetted by the PSX’s Shariah advisor. The criteria specified include investing in KSE Meezan Index (KMI) All-Share securities, Shariah compliant IPOs and Shariah compliant exchange-traded funds.
“The purpose of this platform is to enable non-resident Pakistanis to securely invest in their homeland’s capital market in a Shariah compliant manner,” the PSX said. The platform also provides clients with a broader suite of securities brokers to choose from for their Shariah compliant investing needs.
“The demand for Shariah compliant offerings is consistently rising and the PSX has continued to grow its suite of Islamic capital market products,” noted Farrukh Khan, the managing director of the PSX.
Farrukh also hailed Zahid Latif Khan Securities for being the first brokerage house to integrate and enable the platform service for its RDA clients. “With this development in KiTS, all TREC holders can now offer Shariah compliant products to RDA clients, creating new business opportunities for them.”
Meanwhile, Irfan Siddiqui, the founding president and CEO of Meezan Bank, acknowledged the bank’s leading position in terms of having the highest share in RDA accounts and investments in the domestic equity market.
“The bank is already offering a Shariah compliant trading platform for non-resident Pakistanis through 22 brokers which are onboarded through their own systems. With the launch of this (new) Shariah compliant trading platform, brokers who are using KiTS will also be onboarded with Meezan Bank to further extend these services to RDA customers. We are hopeful that this service will help tap into a wider RDA investor base that is seeking Shariah-permissible investment options,” Irfan said.
Three Islamic fintech start-ups have won financial grants from Saudi Aramco Entrepreneurship Center (Wa’ed) as part of the Fintech Accelerator Program, an initiative by Saudi regulators.
The three are: Afundy, a revenue-based Shariah compliant financing providers, enabling online merchants to raise capital without interest or equity; Takharoj, a digital platform enabling companies engage with existing shareholders and prospective investors to trade in their shares; and Thrift Plan, which helps companies establish digital workplace saving plans to enhance social security.
They each received a grant of SAR50,000 (US$13,314.8) along with an opportunity to enroll in Wa’ed’s business incubation program.
Afund, Takharoj and Thrift Plan are three from the 12 fintech companies selected to join the Fintech Accelerator Program by Fintech Saudi, a initiative which began in 2018 by the Saudi Central Bank (SAMA) in collaboration with the Capital Market Authority (CMA). This year’s cohort include: Beehive Fintech, Finamze, Wealthface, Holo Mortgage Consultant, Erad, Nugttah, Sindbab.Tech, Xpence and ZidPay. They form the second cohort of the program; the first program took place in 2021.
“This year, the Saudi fintech industry has witnessed the largest number of venture capital investment deals. This is in line with the Saudi Vision 2030 that aims for the Kingdom to develop a leading financial sector that keeps pace with the rapid technological revolution. By building regulatory frameworks that attract innovative business models and using emerging technologies that have the potential to advance the provision of financial products and services, we can take the financial services industry to new heights, stimulate investment, promote economic development and empower entrepreneurs,” commented Mohammed Elkuwaiz, the chairman of CMA.
MRHB Network has listed its $MRHB token on Bitlocus crypto exchange, which will aid the Halal crypto firm expand in Europe.
As part of the listing, the firm now also offers euro trading against its native token. In addition to its USDT pair, the new trading pair MRHB/EUR is part of the Halal token’s foray into European markets, enabling crypto users to make instant fiat-crypto conversions.
“The listing in Bitlocus comes as part of a long term and wider partnership between the two entities, where Bitlocus will facilitate MRHB expansion to the European markets through the services and products of its various sister entities. Incidentally, Bitlocus has been one of the earliest allies and supporters of the MRHB team since its ideation phase,” MRHB said in a statement.
The Bitlocus cryptocurrency exchange was founded in 2018. Based and registered in Lithuania, it offers spot trading of more than 16 tokens and cryptocurrencies with euro as the base currency, along with a fiat on/off-ramp.
MRHB’s token is also listed on LBank, BitMart, CoinTiger and Pancake Swap.
The MRHB DeFi platform, which is designed to serve the Muslim community with ethical and Halal services, earlier in the year launched Sahal Wallet, a self-custodial cryptocurrency wallet following an initial dex offering in December 2021 which raised over US$5.5 million in funding.
Abu Dhabi Islamic Bank (ADIB) is observing a substantial shift among its customers toward digital financial services as the number of transactions on its corporate digital banking platform rose 88% year-on-year amid a reduction in branch-facilitated financial activities.
Introduced in 2019, ADIB Direct has benefitted 22,588 MSMEs and has built a user base of 23,789, according to the Islamic bank. Maintaining double-digit growth rates in adoption over the last three years, the bank saw number of branch transactions drop to 14% in 2022 from 33% last year. At a bank level, some 700,000 ADIB customers are digitally enabled across its online banking platforms.
Islamic cryptocurrency trading platform CoinMENA has expanded its services to Egyptian investors from its home base of Bahrain, bringing the number of markets it serves to seven.
Through the latest expansion, users in Egypt will be able to open accounts on the platform and access its services including connecting their bank accounts to their CoinMENA wallets.
“We are excited to be able to onboard residents of Egypt to our platform from our base in Bahrain. Egypt has the largest population and one of the highest crypto adoption rates in the region. This brings us a step closer toward our goal of providing access to digital assets throughout the MENA region,” commented CoinMENA Founders Dina Sam’an and Talal Tabbaa.
“Our ability to onboard residents of Egypt significantly increases our total addressable market,” continued Dina. “We plan to continue working closely with regulators to be able to expand our services to different markets and enable people to have safe exposure to digital assets.”
“The potential in Egypt is massive,” Talal added. “Crypto can provide 100 million Egyptians with access to premium financial services.”
This latest development follows CoinMENA securing a provisional license from Dubai’s Virtual Assets Regulatory Authority and an EU license. Since being in operations a year ago, the firm has focused on expanding geographically as well as its services. It recently partnered with Visa to offer a slew of services including the CoinMENA Visa Card.
CoinMENA is one of two Shariah compliant cryptocurrency exchanges licensed by the CBB, the other being Rain. CoinMENA last September secured US$9.5 million in funding, backed by the likes of BECO Capital and Kenetic, among others.