Fintech is transforming the way people are able to manage their finances. In the UK, the impact of fintech has been profound. In the space of five years, the rise of challenger banks and revolutionary new products has challenged the legacy banks traditional monopoly of the financial system. In short, technology is empowering society by democratizing the banking system.
Fintech’s influence has not been confined to established markets. If we look to emerging regions like Central Asia, a new generation of innovative fintech disruptors are applying leading technological solutions to achieve broader development objectives. This is not a blanket application of existing technologies. Instead, creative thinkers who understand the core challenges facing people in countries like Tajikistan and Uzbekistan are driving the region’s digital transformation.
Should the current trends continue to unfold, Central Asia is set to become an emerging hub for fintech innovation. The core to the region’s success lies not only in its replication of consumer finance and investment products, but in the creation of new fintech products and services. Core to this new wave of innovations is the rise of Islamic fintech. This refers to a banking system which adheres to sharia principles. Evidently, interest payments are inherent to the functioning of non-Islamic banking systems. In response, challenger Islamic banks around the world are offering Muslims the opportunity to access Sharia-compliant systems. COVID-19 highlighted how principles such as Islamic microfinance and Social Sukuk can support social initiatives. Ongoing public assistance of Islamic fintech companies like Alif will only contribute to the rise of Central Asia as an emerging fintech hub.
Fortunately, a new generation of fintech companies are using technology to support the needs of populations that have not had access to fintech solutions. Central Asia is fast becoming a global capital for fintech innovation, particularly when it comes to Islamic finance. To maintain momentum, government support, education and investment into infrastructure is needed for greater digital empowerment of the population.