Fintech: The new barrier to entry in Islamic finance

By Kal Elsayed. First published in Islamic Finance News, 23 August 2017.

Fintech began as a word attached to peer-to-peer platforms, and US financial institutions have come to fear it. A disruption once cost a company 10% to 30% of its market and the organization survived. Fintech makes a disruption likely and large enough to put the organization at risk. The traditional barriers to entry were human capital, financial capital and regulation. Fintech adds a technology-first barrier: the more time invested in automating a process now, the less tedious work later. Guidance Residential identified the trend early and laid a technology foundation for its home financing. Home financing is full of obscure terms, and Islamic rules add another layer, so clarity for buyer and seller at every stage is the test.