Amwaj Islands: Three Islamic banking major, on the sidelines of the WIBC 2017 on Tuesday, announced the world’s first fintech consortium with a mandate to accelerate the launch of Sharia compliant fintech solutions.
Three leading banks offering Islamic Finance have come together to launch the world’s first global fintech consortium with a mandate to accelerate the buildout of innovative, Sharia compliant banking solutions. Called ALGO Bahrain, the consortium includes industry majors such as Al Baraka Banking Group, Kuwait Finance House Bahrain and Bahrain Development Bank.
Kuwait Finance House Bahrain, Al Baraka Banking Group and Bahrain Development Bank are the founding members of the ALGO Bahrain, Islamic fintech consortium. Eight more banks are expected to join the consortium in a next phase.
ALGO Bahrain is positioned to launch 15 banking industry platforms by 2022 across the GCC and emerging markets.
“ALGO Bahrain is a strategic initiative to position Islamic banks for the forthcoming paradigm shift in the banking industry as a consequence of recent financial technology innovations. Inaction is not an option,” said Adnan Ahmed Yousif, President and Chief Executive of Al Baraka Banking Group.
Through a collaborative approach, ALGO Bahrain will enable Islamic banks to research, innovate and operationalize fintech solutions in a cost effective and accelerated way. It will have complete strategic, operational and financial independence to innovate financial solutions that are suited for the digital economic ecosystem.
“We have set an ambitious agenda for ourselves. ALGO Bahrain will aim to roll out 15 fintech platforms across the banking spectrum within five years. The combined strength of our market access, customer base and financial resources will make this happen. ALGO Bahrain is about innovation for social impact,” Abdulhakeem Alkhayyat, MD and CEO of KFH Bahrain said.
ALGO Bahrain first initiative will be a convenient and delightful person-to-small business crowdfunding platform that will fuel the growth of the SME sector. The Central Bank of Bahrain has already issued regulations for the crowdfunding businesses in anticipation of the changes to the industry. The SME sector is the backbone of GCC economies with a central role in creating employment and contributing to the growth of GDP.
“Developments in financial technology are pushing the boundaries of what is possible, allowing the creation of sustainable models to provide financial access to previously underserved members of society. Bahrain is taking a lead in this paradigm shift with the establishment of the Bahrain Fintech bay, and we see ALGO Bahrain as a great collaborative initiative which seeks to leverage on Bahrain’s status as an Islamic finance hub and its fintech ambitions to drive innovative solutions to extend financial services to the startup and SME ecosystem,” Sattam S. Algossaibi, Group CEO of BDB, said.
The ‘ALGO’ era is set to revive the growth of the global Islamic banking industry by promoting financial inclusion, creating new employment opportunities and channeling fresh investment to critical economic sectors across the GCC and emerging markets. The ALGO model will bring down the cost of innovation for member banks while accelerating their speed to market. This will have a direct impact on improving profitability and growth of the banks.
“The real potential of the Islamic banking industry is easily three to four times more than where we stand today. With innovative business models and new revenue and cost structures, the industry should be eyeing an asset base of US$ 9 trillion within five years, compared to the current US$ 2 trillion. Anything short would be failing our customers. ALGO will be a catalyst on this journey,” Abdulhakeem AlKhayyat said.
The Kingdom of Bahrain has embarked on a major initiative to become a global hub for the banking fintech hub.
Bahrain is fast becoming a recognized global FinTech hub. Earlier this year the Central Bank of Bahrain (CBB) launched a regulatory sandbox for fintech start-ups with the Bahrain Economic Development Board (EDB) and Singapore’s Fintech Consortium announcing the launch of Bahrain Fintech Bay (BFB), the largest dedicated fintech hub in the Middle East and Africa.
