Blockchain Use Case in Islamic Social Finance

Abstract

Purpose: This research explains and reviews two innovative solutions based on blockchain that were used for Islamic social finance projects by two separate companies namely Finterra and Blossom Finance. Policy implications are suggested for the future use of blockchain in innovative financial products for the Islamic financial industry.

Design/methodology/approach: This is qualitative research conducted through library research and semi-structured interviews with experts and founders of Finterra and Blossom Finance. Data obtained from published literature and the interviews were accordingly examined and interpreted through content analysis and the results are presented in this research.

Findings: There is rising interest in Islamic social finance for economic revival post COVID-19 pandemic. Innovation through technology seems to be the future of Islamic social finance. Innovation through blockchain technology would see a renaissance in Islamic social finance, hence the need for relevant stakeholders to understand the technology. However, there is a regulatory gap in terms of proper legal framework to support blockchain related innovations in Islamic social finance and a policy gap to manage Shariah and legal risks involved in Islamic social finance transactions.

Originality: This research is original because it explains unique case studies from the source of innovation itself, and analyses the hurdles that were present and offers recommendations for future use of innovative technology in the Islamic financial sector.

Keywords: Blockchain technology, Blossom Finance, Finterra, Islamic Social Finance, Regulatory and Policy Issues