Editorial

Abstract

In the Name of Allah, Most Gracious, Most Merciful. One of the positive developments that has emerged out of the COVID-19 pandemic is the spread of Islamic finance knowledge through free webinars to discuss current issues and the future of the industry. While workshops, trainings and conferences in the past hosted up to only a few hundred participants, the online knowledge sharing sessions have proved more impactful with far greater numbers of participants from all over the world benefiting from the discussions. Now, many of these online workshops and courses are even being organised for fees. It can be said that the pandemic has caused a leap in the provision of online Islamic finance education and training, which is becoming a key component in the future of education.

The pandemic has also highlighted a few other Islamic finance areas that are envisaged to grow in importance. Firstly, Islamic fintech is playing a crucial role in providing the necessary platform for innovative products and services to meet the needs of Islamic finance customers. The use of big data and artificial intelligence can also help Islamic banks in mitigating the cost of transparency and tracking problems arising in financing activities. Secondly, there is a heightened importance of Islamic social finance tools – including zakat (alms), ṣadaqah (voluntary charity) and qarḍ ḥasan (benevolent loan) – to address the challenge of reducing human suffering in the short-term of the pandemic crisis. Reliance on waqf (Islamic endowments) can be another measure for a more sustainable recovery in the longer term. Other Islamic finance tools can also form part of the COVID-19 response and recovery package. In the medium term, for instance, trade financing, financing that is aligned to support specific SDGs, as well as impact investing that supports businesses with social impact could be important avenues through which Islamic banks support recovery. In the long-term, besides waqf that can contribute towards social and economic development, green ṣukūk, SDG-aligned ṣukūk, SRI ṣukūk or other fit-for-purpose ṣukūk can raise long-term financing to assist countries to recover more sustainably. Thirdly, another area that is expected to gather momentum is the combination of Islamic finance tools with Islamic digital platforms to increase the reach of Islamic finance products and services to new market segments such as the tech-savvy generation who favour online transactions. An example could be the establishment of Islamic P2P crowdfunding platforms where both individuals and businesses can access financing, invest and even engage in donations through waqf, ṣadaqah and zakat. Zakat e-platforms are also being developed based on blockchain technology that enable the tracking of the movement of zakat by zakat institutions from the moment of collection to the point of disbursement. Such zakat digital platforms increase transparency in the management of zakat and ensure the efficient utilisation of zakat funds.