Doha: At a time when technology is revolutionising the global financial sector with tech giants offering digital payments and consumer finance solutions, the Islamic finance industry faces unique challenges and opportunities presented by Web 3.0 and metaverse.
The 9th Doha Islamic Finance Conference — which brought together researchers and practitioners of Islamic finance from Qatar and abroad yesterday — explored themes such as Islamic finance in metaverse, regtech and suptech in Islamic finance, and the impact of crossborder finance on Islamic finance. It also discussed the role of endowment (waqf) in the digital age.
In its final statement, the conference said financial transactions in the virtual world with underlying blockchain technology do not, in principle, conflict with the rulings of Islamic jurisprudence, when the Sharia guidelines related to contract and the transfer of ownership are adhered to.
The conference urged increased cooperation between scholars and practitioners to design virtual products and services that comply with the Islamic law. It also recommended leveraging artificial intelligence and virtual reality to develop Sharia governance mechanisms in Islamic financial institutions. “Islamic banks are urged to leverage metaverse technology to expand into new markets and sectors in order to increase their growth opportunities. They are also advised to adopt regulatory technology applications to enhance transparency and compliance, and improve their overall performance, enabling them to achieve greater competitiveness,” the statement said.
Prof. Dr. Raditya Sukmana, from Indonesia’s Universitas Airlangga, discussed Islamic endowments in the spectrum of metaverse.
He said metaverse could facilitate and speed up the process of waqf, and thus contribute to the community through building schools, hospitals and other welfare projects.
Prof. Dr. Ahmet Faruk Aysan, from the College of Islamic Studies, Hamad Bin Khalifa University, said the virtual world also presented ethical issues, with users having multiple identities and there being no traditional governments in metaverse.
He said with children spending more and more time in the virtual world, it was a consideration for parents how their children were behaving online. “Because in the end, whatever we do in the virtual world, will affect our real life.”
Perttu Heikki Korhonen, Assistant Director at Bank Supervision, Qatar Financial Centre Regulatory Authority, discussed suptech — the use of tech by supervisory authorities. He said challenges facing supervision were: increasing scope, increasing complexity, regular shocks such as COVID-19, reliance on manual procedures, ineffective use of unstructured information, and being process-driven and reactive.
The benefits suptech offers are efficiency, insight, and scale. Asked if suptech could have saved Silicon Valley Bank from collapse, Korhonen said yes.