The youngest Islamic bank in Tunisia could become one of the first Shariah banks in the region to adopt blockchain technology as it prepares to implement a proof-of-concept (POC) expected to launch in March 2019, a pilot project which could potentially trigger wider adoption of distributed ledger technology for Islamic financial services in Africa and other OIC countries.
Wifak Bank, previously a conventional leasing company which converted into a fully-fledged Islamic bank in 2017, has agreed to implement the i-Trade platform, a real-time platform facilitating the transaction of real commodities to assist Islamic banks manage liquidity using smart contracts. The Murabahah-based platform is being developed by Tunisia-based I-Fintech Solutions; and if successful, it would be rolled out in Islamic banks across IDB member countries, as part of an agreement with the Islamic Corporation for the Development of the Private Sector (ICD).
“This solution has been inspired by the Malaysian experience, specifically Bursa Suq Al Sila,” I-Fintech CEO and founder, Mohamed Anouar Gadhoum, told IFN Fintech. Mohamed, who began his Islamic finance career in Malaysia with stints in BNP Paribas Najmah and ISRA Consultancy, noted that the absence of an efficient Islamic capital market in Tunisia is a major hurdle for local Shariah banks, preventing them from fully serving their clients’ liquidity needs.
“The use of blockchain in this product will reduce both the overall execution time and the cost of the financial and commercial transaction. It also addresses the issues and challenges related to the transparency and the traceability of financial transactions,” explained Mohamed.
In a country which only formally began regulating Shariah banking services three years ago, fintech could play a key role in growing the industry.
According to Mohamed, who sits on the Shariah boards of Zitouna Tamkeen and Amana Takaful Company, the i-Trade platform can also be utilized to structure other Islamic financial instruments including Sukuk and I-Fintech is also working on a number of other Islamic fintech solutions including one for Takaful.