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Electronic trade finance platforms to help match traditional markets

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Points of Essence:

  • Islamic banks are urged to be at par with the conventional banks by developing electronic trade finance platforms. Islamic banks needs to adopt the platforms to meet the demands of the clients who  are used to the system, as the continued interest in Islamic finance presents growth opportunity for Islamic banks. Business 24-7 has the report.

Electronic trade finance platforms, being developed by most Islamic banks, would place them on an equal footing with traditional finance markets in terms of planning as well as the number of transactions that a bank can handle.

Five years down the line, these platforms would change the scenario, said Mannan Mansoor, Head of Central Shariah Group, HSBC Bank Middle East, at the Trade Finance Middle East Conference.

While most of the growth in Islamic banks would come from the Middle East, there is tremendous potential that can be tapped from Islamic markets that do not currently have the kind of infrastructure that is in place in this region, said Mansoor.

“There is high potential in case of countries such as Indonesia, Egypt and Turkey. Additionally growth can be expected from Pakistan and Bangladesh, which have been working in Islamic finance for quite some time,” he told Emirates Business.

Talking about growth in Islamic finance, he said it could be seen in terms of shifting of the existing customer base from traditional finance markets or even from untapped markets that are currently not using bank finance.

“For international players, it makes sense to go in for Islamic finance as it would provide them with an added source of liquidity and also allow them to diversify their investor base,” he added. He said key Islamic banking markets such as Saudi Arabia, the UAE, Qatar and Bahrain have seen tremendous growth in the past few years. “In percentage terms, they outpaced the growth in traditional finance in the past three years. We expect similar growth to continue in the coming years as well.”

Regarding electronic trade platforms, he said these were demanded by “clients who have bulk transactions, who have cross-border requirements and those used to electronic trading platforms from the traditional finance side”. “It is imperative for Islamic trade financers to be able to come with such solutions to meet the service provided by traditional finance providers, and they have already begun doing so.”


Written by Suapi Shaffaii

November 13, 2008 at 5:07 pm

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