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Solving challenges facing Islamic finance

Shaima Hasan
Shaima Hasan
Senior Proposition Manager, Islamic Finance, Refinitiv

COVID-19 has provoked an evolution of the way trade and transactions work in the Islamic finance industry. How does Refinitiv’s Islamic Deal Connect (IDC) help investors by combining convenience and digitalisation?

  1. The impact of COVID-19 on financial markets has hastened the need for agile, flexible solutions to help the digitalisation of Islamic finance.
  2. The growth of Islamic finance has meant that evolving industry regulations require increased levels of scrutiny.
  3. Refinitiv has adapted to these demands through the introduction of Islamic Deal Connect.

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Since the onset of the global pandemic in 2019, COVID-19 continues to be a serious health concern that has significantly disrupted financial markets.

Taking into account the much-needed changes in private and public sectors in the move towards greater sustainability and digitisation, the need for creative technological solutions is now more vital than ever.

The urgency for agile and seamless workflows was underscored in the earliest days of the pandemic when financial institutions were forced to alter their infrastructure amid potential disruption. In response to the public health crisis, firms sought to automate processes and reduce dependency on manual work.

An ever-growing Islamic finance ecosystem also means increased regulatory scrutiny in an industry that prohibits interest-based transactions, in accordance with Shariah law.

IDC Blotter View – Centralised Real-Time Monitoring. Solving challenges facing Islamic finance
IDC Blotter View – Centralised Real-Time Monitoring

How does Refinitiv support this post-trade evolution?

Our Islamic Finance function has identified advantages in agile workflow capabilities that are industry-compliant and cost-effective.

Islamic Deal Connect (IDC), by Refinitiv, is a comprehensive post-trade solution for Islamic deals. It provides workflow automation capabilities and straight-through processing (STP) in conjunction with the Refinitiv Auctions App and Conversational Dealing.

IDC provides a fully automated system integration capability between multiple counter-parties to support the end-to-end process of Islamic Money Market Transactions. It also automates ticket creation from the Refinitiv Auction App and the FX Trading (FXT) platform, including Refinitiv Dealing, and integrates across middle or back office Treasury Management Systems (TMS) and Broker Order Management Systems (OMS).

 IDC Deal-Type Config – Enhanced End-To-End Efficiency. Solving challenges facing Islamic finance
IDC Deal-Type Config – Enhanced End-To-End Efficiency

IDC simplifies the entire process and decreases the cost per transaction. In addition, it improves trading efficiency by lowering the total cost of ownership (TCO) by way of automated ticket capture and sharing, along with straight-through processing (STP), for post-trade workflows.

Islamic Deal Connect ensures the automation and streamlining of the post-trade process in Islamic deals, integrating multiple broker systems within a single flexible STP environment, which minimises manual activities and operational risk.

Discover more about Islamic Deal Connect

Watch – Islamic Deal Connect: Digital transformation for Islamic money market deals

Megatrends shaping Islamic finance

As the world steps into the new era of technological evolution, there are several global megatrends and drivers that are expected to change the world.

In our OIC Megatrends report for 2022, we have identified six global megatrends that will be catalysts for change and transformation in the Organization of Islamic Cooperation (OIC) societies, which, in turn, will push forward the $3.3 trillion Islamic finance industry.

In the report, which launched in May 2022, the Refinitiv Islamic Finance research team highlighted digitalisation, AI and transformation as part of the six inter-related megatrends.

We have found that the COVID-19 pandemic accelerated digitalisation across many sectors, with many new investments in tech and tech applications across the market.

Furthermore, the adoption of AI and automation will result in far-reaching implications for citizens of the globe, while on the other hand providing novel solutions to the problems of the industry through AI-rich platforms.

Many successful examples emerged in both Islamic banks and Islamic fintech, resulting in greater customer-centricity and embedded Islamic finance.

Amid such disruption, the report highlights the potential for a major transformation and innovation, not only for the Islamic finance industry but also for the overall market.

Increased instances of market disruption have resulted in the development of best-in-class capabilities to meet market demand and enhance the overall ecosystem and infrastructure of the digital space.

As a consequence, the introduction of fintech solutions and new products has driven the digitalisation of transactions, such as Islamic Deal Connect by Refinitiv.

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Read the ICD-Refinitiv OIC Megatrends Report 2022

Discover more about Islamic Deal Connect


How has Covid affected the Islamic finance industry?

An ever-growing Islamic finance ecosystem has meant increased regulatory scrutiny in an industry that prohibits interest-based transactions, in accordance with Shariah law.