The 14th Islamic Financial Services Board (IFSB) Summit 2019, touched on trends that will impact Islamic finance and what is now needed to support maturity.
In his opening address, the Secretary-General of the IFSB, Dr Bello Lawal Danbatta highlighted that the theme of the summit - Islamic Finance for Sustainable Development in the Era of Technological Innovation - points to the future of Islamic finance. He said that economic challenges, environmental awareness and technological innovations will change the traditional understanding of how the financial industry should operate. Sustainability is also a growing concern among investors, industry players and regulators.
Dr Danbatta further outlined that technological developments have led to the emergence of conceptual innovations and new tools for Islamic financial services but need a strong regulatory, supervisory and legal underpinning that can facilitate the mainstreaming of these instruments.
In a keynote speech, HE Dr Perry Warjiyo, Governor of Bank Indonesia and Chairman of the Executive Committee of the IFSB said: "It is heartening to note that Indonesia is hosting the IFSB Summit 2019." He appreciated the progress made so far by the organisation and is confident that ongoing reforms will advance the IFSB further.
He outlined five overarching strategies to develop Islamic finance in the era of the technological innovations:
- Supporting the digitalisation of Islamic banking;
- Interlinking Islamic banking with fintech;
- Encouraging startup innovations for Islamic finance development;
- Developing the infrastructure for payment systems and the Islamic money market;
- Strengthening cross-border collaboration and cooperation among IFSB members.
In her keynote, Dr Zeti Aziz the former Governor of Bank Negara Malaysia, lauded the rapid technology-led innovations in the financial services industry. They have dramatically changed the way in which financial systems operate across the globe, she said. While the technological innovations may have been disruptive to the current structure of the financial services sector, they also offer potential for enhancing the effectiveness and efficiency of the financial system.
Dr Zeti explained that with technological innovation the cost of transactions are significantly reduced, outreach is extended, economic participation increases, and greater financial inclusion is achieved. However, technological developments require regulations and standards that address potential risks such as the improper use of data, fraud, cybercrime, and money laundering.
She suggested that the IFSB can play an important role as a repository of policy responses to financial innovations as well as a facilitator for the coordination and harmonisation of such responses across borders.
A video keynote was delivered by the Honourable Tun Dr Mahathir bin Mohamad, Prime Minister of Malaysia. In his speech, he expressed his gratification at the positive development of the global Islamic finance industry and its positive impacts on the financial system in general and financial inclusion in particular. HE Tun Dr Mahathir bin Mohamad also said that it is heartening to see how the IFSB has flourished and has become a highly respected international standards body for the Islamic financial industry.
Other speakers at the event, which ran from November 13 to 14, included HE Nor Shamsiah Mohd Yunus, Governor, Bank Negara Malaysia, HE Dr Ahmed Abdulkarim Alkholifey, Governor, Saudi Arabian Monetary Authority (SAMA) and HE Tahir bin Salim bin Abdullah Al Amri, Executive President, Central Bank of Oman.