Islamic Banks, Technology and the Need to Improve Financial Inclusion - Muazzam Mohamed

Tuesday, January 19, 2021 / 8:32AM / Bukola Akinyele-Yisau for WebTV / Header Image Credit: WebTV

In a recent interview with the Islamic Markets platform the Chief Executive Officer of Bank Islam Malaysia Berhad, Mr.  Muazzam Mohamed, believed Islamic banks have a key role to play in leveraging technology to close the gap in financial inclusion.

Providing insight into the potential role of technology in Islamic finance, he said technology does not only transform lives but enables an equal opportunity for all, such as the availability of smartphones and a lot of content on YouTube to enable learning. Technology, he notes, has changed the learning structure like never before, similarly for the banking sector's development.

Digitization he stated was vital to financial inclusion and ensuring greater equality and opportunities. He said the vision of the Islamic banking system was to advance the prosperity of society and to give financial access to the unserved and underserved members of society.

He added that in enabling financial inclusion, digitization and technology should be used to find and develop innovative ways to provide affordable financing for all. 

"Most Islamic banks still rely on traditional data to evaluate the creditworthiness of an individual applying for a loan as we are in the 21^st century we need a data point that collects customer behaviour" he said.

The role of Islamic banks today is not only to serve as a financial intermediary but to also intermediate the creation of social and economic benefits.

The CEO noted that Islamic banks or Bank Islam in Malaysia particularly adopted an approach to strategically offer banking products, services, and initiatives beyond the traditional banking culture. According to him, the approach was to deliver social impact and economic returns beyond providing Shariah-compliant frameworks.

Speaking further he identified the fact that one of their key initiatives was to promote financial inclusion especially for those people who are less privileged. 

The CEO of Bank Islam Malaysia Berhad said the bank was able to raise a donation from the public to support high-impact, socio initiatives in collaboration with the government.

Through the use of savings data, he made a strong case for Islamic banks to promote financial literacy for their customers to empower them and provide opportunities for small-scale businesses to access funding. 

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