Enhancing The Role of Islamic Finance within Digital Economy Era: "Opportunities and Challenges"
Four Points Hotel Makassar, July 4 - 5 2018
Digital technology is rapidly becoming the biggest driver around the world of economic innovation, competition, and growth (ADB, 2017). However, digital technology creates both opportunities and challenges for finance industry. Digital technology in financial sector (fintech) has changed the landscape of the industry, enabled the ecosystem for financial inclusion, and produced innovations. Nevertheless, fintech emerges critical issues to anticipate such as technology failures, employment, regulatory gaps and consumer protection. Therefore, well-coordinated policies and regulations are demanded to ensure the financial market is becoming more efficient and stable while technological innovation in the industry keeps developing at all levels. In the context of Islamic finance, fintech must also comply with sharia rules. McKinsey Global Institute in 2016 projected that the role of digital finance will be becoming more significant in the future. Using its various platforms such as P2P lending and crowdfunding, fintech has enabled financial services to operate with greater efficiency, innovative and accountable. Digital technology also widens opportunity for the industry to tap new market with lower cost structure and wider coverage, and increases chances for entrepreneurs and MSMEs to access capital as alternative to accessing traditional lending institutions.
According to McKinsey, fintech holds the potential to increase the inclusion of about 1.6 billion people in emerging economies by providing more access to financial services, thanks to nation-wide coverage telecommunication infrastructure. Fintech will benefit stakeholders by increasing volume of loans to businesses and individuals up to USD2.1 trillion; contributing to save government budget up to USD110 billion per year; saving $400 billion for direct costs; and increasing the balance sheet by USD4.2 trillion. By going digital it is expected that the annual GDP of all emerging economies will improve by USD3.7 trillion (6%) by 2025. Nevertheless, the future economic impact of the application of digital finance may vary significantly depending on countries' starting position. In Indonesia's case, it is estimated that there will be USD150 billion in growth - or 10 percent of GDP - by 2025 if Indonesia digitizes its economy effectively and efficiently. As well as financial sector in general, Islamic finance is also exposed to disruptions due to technological changes. Major Islamic centers such as Malaysia, Bahrain and UAE have embraced and anticipated the disruptions by issuing a regulatory sandbox framework; or by introducing Innovation Testing License in Dubai for the new products and business models to be tested within the Dubai International Financial Center (DIFC). In addition, on January 8, 2018, the Abu Dhabi General Market (ADGM) and the Bahrain Economic Development Board (EDB) signed a Fintech Cooperation Agreement, the fist in the MENA region, which will allow for a closer collaboration on the exchange of information on trends, services and products, and building a closer relationship between the development of Islamic finance and fintech initiatives across the region. In Indonesia, there are currently about 115 startups, 23 financial institutions and 7 association partners collaborating and making the best use of technology for business platforms. Among 115 startups, 30 companies are registered, and one is registered as a sharia-based fintech company. Another one company has a business license from the Indonesia Financial Services Authority (OJK). OJK and Bank of Indonesia as regulators for financial services and payment system have issued sets of regulations, including sandbox, as legal basis to support development of fintech and at the same time protect consumers' interest. According to the ICD-Thomson Reuters Islamic Finance Development Report (2017), Islamic finance has recorded 7% growth in the last decade in terms of total global assets or equal to USD2.2 trillion. The report shows that banking still dominates Islamic finance industry with 73% of total Islamic finance assets, while Sukuk (16%), Islamic Mutual Funds (4%), Takaful (2%) and other Islamic financial institutions (6%). The rise of fintech, though regarded as an industry disruptor, brings huge potential for innovative partnerships and developments for Islamic finance in areas such as regulatory technology, P2P takaful platforms, or automated Islamic wealth management portals. As a result, Islamic finance will able to compete and increase its market share. Finally, broadening access to Islamic financial institutions through digital technology will not only contribute to financial inclusion but also unlock productivity and investment, reduce poverty, empower women, and improve the economy for sustainable development.
Time Start | Time End | Agenda |
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08:30 | 09:15 | Registration |
09:15 | 09:25 | Opening National Anthem : Indonesia Raya Quran recitation |
09:25 | 09:40 | Welcome remarks
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09:40 | 09:55 | Keynote 1 H.E. Dr. Bandar M. H. Hajjar, President of IDB Group (represented by Director General of IRTI-IDB, Dr. Humayon Dar) |
09:55 | 10:10 | Keynote 2 H.E. Dr. Sri Mulyani Indrawati, Minister of Finance of Indonesia |
10:10 | 10:20 | Opening, Photo Session and souvenir presentation (MoF proceeds to Press Conference Room) |
10:20 | 10:30 | Coffee Break |
10:30 | 12:00 | Panel Session 1: Digital Economy in OIC Member Countries: Challenges and Opportunities This session will discuss the current condition of economic and finance of OIC member countries,
Discussion Chair: Shaima Hasan, Research & Bespoke Solutions Manager, Thomson Reuters |
12:00 | 13:30 | Dhuhur Prayer & Lunch Break |
13:30 | 13:50 | Guest Lecture “Balancing Innovation, Competition and Consumer Protection for Financial Services Institutions in Digital Era” Prof. Dato’ Azmi Omar, President and CEO, INCEIF |
13:50 | 15:20 | Panel Session 2: FinTech, Islamic Finance and Regulatory Issues This session will discuss regulatory issues on Islamic finance and financial tecnology.
Discussion Chair: Kahlil Rowter, Prospera |
15:20 | 15:30 | Coffee break |
15:30 | 17:00 | Call for Paper, Parallel Presentation PIC: Faculty of Economics and Business, Universitas Hasanuddin |
19:00 | 21:00 | Welcome Dinner Performance (Unhas’ traditional dance group, IAEI etc.) |
Time Start | Time End | Agenda |
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16:10 | 16:20 | Photo Session and Souvenir Presentation |
16:10 | 16:30 | Closing Arif Baharudin, Assistant of Minister for Financial Services and Capital Market Policy and Regulation, Ministry of Finance |
14:40 | 16:10 | Panel Session 5: Fintech for the Inclusion, Development, and Efficiency of Islamic Finance This session will discuss the role of fintech for Islamic financial market development.
Discussion Chair: Dr. Muhammad Yusri Zamhuri, Hasanuddin University |
14:30 | 14:40 | Photo Session and Souvenir Presentation |
13:00 | 14:30 | Panel Session 4: Sharia Compliance for Fintech Services This session will focus on the issues of sharia compliance of technology-based Islamic finance products and transactions.
Discussion Chair: Ashraf Gomma Ali, Director and Regional Head Shariah, CIMB Group |
12:00 | 13:00 | Dhuhur Prayer & Lunch Break |
11:55 | 12:00 | Photo Session and souvenir presentation Announcement and Call For Paper Awards Presentation (MoDP proceeds to Press Conference Room) |
11:25 | 11:55 | Keynote Speech : H.E. Prof. Bambang P.S. Brodjonegoro, "Social Impact in Digital Economy : Islamic Finance Development Strategy" |
10:55 | 11:25 | Guest Lecture “The Future of Islamic Finance: Between Sharia Principles and Innovation” by: Prof. Habib Ahmed, Sharjah Chair in Islamic Law and Finance in the Business School, Durham University. |
10:45 | 10:55 | Photo Session and souvenir presentation |
09:05 | 10:45 | Panel Session 3: Islamic Digital Finance for Sustainable Development This session will discuss the role of Islamic finance for sustainable development in digital economy era.
Discussion Chair: Ashraf Bin Arshad, Financial Sector Specialist, World Bank Office Malaysia |
09:00 | 09:05 | Opening |
08:30 | 09:00 | Registration |
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