Ripple is one of the most important companies in the cryptocurrency world. It has expanded to many different financial institutions and it continues to do so. Dilip Rao, Ripple’s global head of infrastructure innovation, said that the company’s products can help boost Islamic finance.
There are several Islamic financial institutions that are working with blockchain technology or considering working with it. These companies are considering distributed ledger technology (DLT) as a sharia-tool that would be able to improve cross-border payments, financial inclusion and be compliant with Sharia certifications.
The traditional banking system is sometimes not ideal for Islamic institutions. This is why they are searching for new systems that would help them improve their performance.
One of these networks that is helping the Islamic financial industry is Ripple. The general manager at the Shariyah Review Bureau, Mansoor Munir, explained that Islam recommends having solutions that help solve the problems that mankind faces.
At the same time, Dilip Rao explained in a tweet uploaded a few hours ago, that Islamic banks can engage with Ripple and transform their own systems to extend their reach.
I live in Saudi. The number of workers here from neighboring countries is staggering. They are here for one reason only, to send money back home! This is your market sir! Best of luck…
— Ben Chambers (@bassben411) November 2, 2018
The Islamic Finance industry faces problems that might only be able to be solved using distributed ledger technology (LDT). One of these issues is to solve sharia-compliant contract and validation.
This is why there are several Islamic banks that are searching for different ways to start using blockchain technology. One of these banks is Al Rajhi Bank, which is an important player in the Islamic financial market. This institution from Saudi Arabia will be using blockchain technology to execute thousands of transactions per day.
On the matter, the bank explained:
“Al Rajhi Bank is betting big on technology. Blockchain is just one initiative that falls under our digital growth strategy. Al Rajhi has gone global ever since its first success with the use of blockchain technology last year.”
The bank is currently working with Ripple and was able to benefit from this partnership. Mr. Rao said that DLT offers a more collaborative and democratic platform that is able to reduce costs and it can extend the reach of the financial services to those unbanked.
The Middle East region can embrace blockchain technology and help the whole financial sector of the region. According to the First Abu Dhabi Bank, remittance outlays in 2016 managed $100 billion dollars. By using Ripple’s technology, banks could make payments faster and also reduce the costs associated with traditional transactions. Additionally, Ripple can also work to improve banking experience in Islamic countries. Blockchain technology can solve the problem of forged fatwas and other Sharia certificates.
Distributed ledger technology is helping traditional financial institutions to reduce their costs and improve their services. The same it will be able to do with Islamic Financial institutions in the Middle East and other regions around the world.