The relationship between technology and Islamic finance is a new one as the complex and unconventional nature of Islamic finance requires dedicated software systems to cater to the different interpretations of Sharia in various jurisdictions. Path Solutions is leading the way in a new dawn of financial growth.

Economies worldwide are making a global transformation in which the information technology industry assumes increasingly greater importance. Indeed, technology is evolving at amazingly rapid speeds. The awe-inspiring advances that drive the technology industry forward have dominated several study topics, for they have taken productivity upwards.

Technologies and innovations always surprise, and can have significant and disruptive impact on our economies, industries and livelihoods. Nevertheless, we see considerable reason for optimism. Many technologies offer immense opportunities on the horizon, and provide an opening for new players to revolutionize the established order with breakthrough initiatives.

For the Islamic financial services industry, change is the key driving force in a complex global financial ecosystem. This change is mainly based on continuing advances in technology. Path Solutions is a leading information technology solutions provider offering a broad, deep spectrum of Sharia-compliant integrated solutions and services to the Islamic financial marketplace.

Technology as an enabler of operational excellence

Today’s climate of political and economic uncertainty and stiff competition gave rise to the need for Islamic financial institutions to quickly address challenges and opportunities, driven primarily by market forces such as customer choices, compliance and regulatory requirements, and the need to reduce operational costs and increase market share. So the adoption of new technologies is becoming a priority for Islamic financial institutions.

For the past several years, Islamic financial institutions’ technology spending generally remained flat. During and right after the financial crisis, belt-tightening measures were enforced across the global financial services segment. In 2011 however, they finally enjoyed some breathing room thanks to some revived spending power.

Computerworld’s Forecast 2014 Survey of IT executives shows that IT budgets are indeed continuing to make a good recovery since then. IT is expected to again kick up spending on security tools, alternative banking channels, social media, mobile applications, analytic systems and cloud computing. But with regulatory scrutiny more intense than ever, Islamic financial institutions’ technology investments will likely focus more on driving efficiencies while complying with further stringent regulatory requirements.

Unleashing the potential of technology in Islamic finance

Islamic finance has thus far not benefited fully from modern technologies, due to a lack of awareness of technological advancement and consideration for anticipated advantages. Moreover, supervisory authorities have failed to adopt a unified approach as to technological innovations. Not all of them believe that Islamic finance is a discipline in its own right that requires separate technologies, provided by dedicated system vendors. In a long race for competiveness and innovation, without a deep appreciation of the technological capabilities of Islamic finance, the industry will surely fall behind its conventional counterpart.

The use of technology in Islamic finance simply requires foresight and determination. As we observe the industry growing by leaps and bounds, it is important to address legal and regulatory compliance requisites and keep abreast of changing requirements and industry best practices. With the adoption of specialized technologies, the potential to sharply expand the industry globally is inevitable.

The usage of information technology is not solely seen as the only viable way towards improving the Islamic financial institution internal processes and enhancing its operational efficiencies, but also to ensure the compatibility of its activities with Sharia principles. An important principle behind Islamic finance is the desire to maintain the moral purity of all financial dealings. The rationale behind this is rather one of prudence and transparency as predicated in Ahkam al-Iqtisad wa al-Muamalah of Fiqh al-Muamalat.

Designed to meet the needs of modern Islamic banking, Path Solutions’ turnkey solutions are based on an open, flexible architecture and an established deployment methodology. The company’s flagship product, iMAL, provides a complete suite of Islamic banking applications with a rich sweep of functionality and features, addressing Sharia compliance, local and regulatory requirements. The system is built on the JEE platform and is SOA compliant. iMAL runs as a web application and can be deployed in a multi-tier setup environment. With significant architectural renewal through componentization and web deployment, iMAL offers particular appeal to Islamic financial institutions willing to take advantage of the flexibility, reliability, scalability and portability that this platform offers.

The impact of faith-based technology in an age of globalization

The complex and unconventional nature of Islamic finance requires dedicated software systems to cater to the different interpretations of Sharia in various jurisdictions, and ensure full compliance with the accounting standards for Islamic financial institutions as set by AAOIFI, and the risk management and capital adequacy standards as prescribed by IFSB. As these prudential standards and guidance notes are still evolving, a comprehensive approach that takes into account international and local regulations and technological tools from a Sharia perspective is required.

While the industry has become sophisticated enough to appeal to a wide customer base, the pressure for a larger portfolio of new and innovative Sharia-compliant products and quick yet efficient banking services brought a complete paradigm shift on Islamic financial institutions’ performance in a bid to catch up with a rapidly growing demand. And as such, these institutions should be able to embrace new trends and exploit the opportunities of modern faith-based technology, given that change in a globalized world is only expected to hasten in the future.


The Western financial system has kept Islamic finance dormant for centuries. However, there has been a marked revival of interest lately. Despite an unfavorable environment and a financial recession which made the traditional banking system significantly suffer and contract, the Islamic finance industry is growing at a staggering rate of 15% to 20% annually, undeterred by the uncertain climate elsewhere in the world’s financial markets.

Recognizing the increasing market demand for Islamic financial services, aspiring global players are fostering a more systematic approach to shaping the dynamic scene. As Islamic financial institutions continue to expand and grow in sophistication, Sharia-compliant technology is increasingly becoming a key enabler to gaining a foothold in this emerging sector.

For those not yet aware, the future of Islamic finance is now. In the modern age, new technologies proliferate rapidly. At Moody’s, assessing the technological sophistication of a financial institution is becoming an increasingly important element in the institution’s rating methodology. Leveraging technology for goal-driven performance optimization is a must-have skill set to enabling an organization to scale. In their quest to outperform conventional banks, Islamic financial institutions ought to take on an active role in making this happen.

About Path Solutions

Path Solutions’ team of qualified professionals and complementary solution partners have an unparalleled ability to address regulatory and Sharia compliance requirements at both international and regional levels. Armed with deep industry expertise and field-tested best practices, the company’s team strives to provide the highest quality services to clients all over the world.

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