Islamic banking system in Australia and modern technologies

Tehran (IQNA) — The emergence of Islamic finance in Australia is just the start of a huge moral finance debate that banks have been trying to keep alive for years.

Gustavo Quiroga, managing director of digital services company Mobiquity in Asia Pacific, in a note published on this website, referring to the social commitments of banks, wrote: “Environmental, social and corporate (ESG) has become an industry financial buzzword in 2022. However, although everything looks great on the surface, customers are beginning to question the commitment of banks and financial institutions not only to environmental management, but also to their social partners.

This month, the Islamic Bank of Australia (IBA) received a banking license from the Australian Prudential Regulatory Authority (APRA). Although it is a limited license, this is an exciting initiative to expand financial inclusion and ethical offerings in the local banking and financial services industry.

A study by Islamic financial services provider Hijaz shows that one in three Australian Muslims admit they have lost significant financial savings due to a lack of suitable financial opportunities. To avoid theft, these people keep large sums of money in their homes and avoid taking out mortgages.

These restrictions not only affect the final cost of banks and financial service providers, but also negatively affect the quality of life of Australian Muslims.

By planning to offer Sharia compliant loans through brokerage channels, the IBA is competing to provide financial services to this important community of Australian society that is opening up to financial participation. But inclusion of these services is not only about access to these services, the ABA’s 2021 Consumer Banking Trends Report confirms that Australians are rapidly adapting to the digital age of banking, bridging the gap in affordability and consumer experience.

However, with the rapid development of technology, banks and financial institutions are challenged to innovate at the pace that customers want, and perhaps even harder, to meet their expectations for a successful experience.

Earlier this year, our digital engineering team at Mobiquity launched a prototype Islamic bank with online financing (murabaha) to support the growing global Muslim community. Developed in just six weeks, this Sharia-compliant service prototype enables any financial institution to enrich its Islamic banking services with infrastructure-related technologies.

The rise of Islamic banking is just the beginning of a much broader debate about the ethics of banking and the affordability of financial services. A debate that banks have been having for decades. The challenge is to keep up with the speed at which society is changing, and technology is at the forefront of influencing these social changes.

Products and services also do not have to be Sharia compliant, for example we need to consider financial support for the one million new immigrants who have become an important part of the Australian economy over the past five years. The answer lies in personalized banking and financial services that meet the desires and needs of these groups, large or small, but important in our society.

In a world where corporate governance and social impact enhance brand appeal, ethical awareness must be a priority when developing products and services. This allows consumers to make financial decisions with a variety of product and channel options that meet their needs without sacrificing value. This can only be achieved when banks adopt a customer-driven approach to innovation.

Without such an approach, the financial inclusion gap will only widen, and the result will be a deterioration in the financial health of society.”