The UK and Turkey have launched a joint initiative to create wider access to Islamic finance through financial technology.
A working group supported by Borsa Istanbul and private sector industry group TheCityUK has been convened and has produced a report laying out the opportunities to make the financial services market more accessible to those that have opted out of the financial system for religious reasons.
According to World Bank figures, 6% of the global population have opted out of the financial system due to religious reasons and in Turkey, despite it being a secular democracy, this figure could be as high as 19%. In total, just less than half of Turkish adults do not have a bank account.
The UK-Turkey Islamic Finance group claims that the creation of sharia financial products available via smartphones could help to bridge the gap. The collaboration will involve sharing mutual expertise and experience with Turkish banks looking to learn from the UK’s position as a leading international fintech hub and its status as the leading Western centre for Islamic Finance.
“Islamic, or Participation, finance has the potential to transform the world of finance, not only for the 1.8 billion Muslims globally, but for anyone who is attracted to its equity-based, risk-sharing, and socially responsible model,” said Wayne Evans, advisor, international strategy, TheCityUK.
“Participation finance helps reduce poverty, expand access to finance, develop the financial sector, and build stability and resilience with its interest-free, asset-based/backed, risk-sharing and sustainable features,” said Recep Bildik, director at Borsa Istanbul.
“Indeed, it has much in common with Environmental, Social and Governance investing and has an appeal far beyond Islamic audiences. By leveraging financial technologies it is possible to expand financial inclusion in Islamic capital markets,” he added.
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