Use smart contracts: Expert

Manama : Islamic finance industry must make the most out of ‘smart contracts’, which promises to be an economic and efficient tool in facilitating contracts, according to experts at the 24th World Islamic Banking Conference (WIBC)

According to the experts, smart contracts presents itself as a chance for the Islamic Finance Industry to be proactive in embracing technology. Smart contracts which is computerized transaction protocols which helps to enforce a contract, has been gaining traction in recent years. 

“The advent of Fintech is changing the industry, blockchain enables smart contracts which reduces costs.” said Khalid Hamad, Chairman of International Islamic Financial Market & Executive Director of Banking Supervision at Central Bank of Bahrain. “Smart Contracts need to be developed to the point where they are admissible in court and can be used in dispute resolution” he added.

“The Islamic Finance industry has historically played catch up with initiatives in mainstream finance. There’s an opportunity to develop needs of islamic finance industry in the development of smart Contracts from the beginning” said Partner at Clifford Chance Habib Motani.

In his opening address Hamad also stressed on the growing need for standardization across the industry, Hamad said, “IIFM has been at the forefront of developing capital and money market as well as trade finance standards for the Islamic finance industry. Standardization is a must for continued and sustainable growth of Islamic finance. We at the IIFM listen carefully to the industry’s demands when deciding about our focus areas. We follow an elaborate process of extensive market consultation while developing a standard.”

“The rigor of this process ensures the quality of the output when the standard is finalized. The adoption of these standards, however, has been low but increasing. We expect Islamic banks’ leadership as well as regulators to encourage the adoption of these standards in their respective jurisdictions in order to lower their cost of operations and improve efficiency.”

The three day event held Under the patronage of the Prime Minister HRH Prince Khalifa bin Salman Al Khalifa and being organized by International Islamic Financial Market at Art Rotana in Amwaj saw an audience of 400 delegates yesterday. The opening address by was followed by an overview of the IIFM standards and its contribution in the development of the Islamic finance industry.” 

“The rest of the day ensued with thought-provoking sessions covering the most pressing issues affecting Islamic financial markets like Sukuk market trends and development & FinTech and the role of smart contracts in the context of hedging and financial services.”