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Saudi Arabia's IDB plans blockchain-based financial inclusion product

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Saudi Arabia's IDB plans blockchain-based financial inclusion product

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(Reuters) – The research arm of the Islamic Development Bank [ISDBA.UL] plans to use blockchain technology to develop sharia-compliant products, aiming to support financial inclusion efforts across its member countries. The Jeddah-based Islamic Research and Training Institute said it had signed an agreement with local firm Ateon and Belgium-based SettleMint, with the first stage to focus on a technical feasibility study. The agreement is the latest effort to combine blockchain technology to tap demand from Muslim investors, with firms from Indonesia to Canada having already received sharia-compliant certification for their products. Involvement of the IDB, a multilateral development institution, could also encourage other fintech firms to incorporate Islamic finance to tap markets across the Middle East, Asia and Africa. Islamic finance follows religious principles such as a ban on gambling and outright speculation, but until now the sector has focussed on traditional retail banking services. Blockchain involves a shared electronic ledger that allows all parties to track information through a secure network, removing the need for third-party verification. The IDB said such features would allow for instantaneous clearing and settlement of transactions and asset exchanges, while helping eliminate counterparty risk.

(Reporting by Bernardo Vizcaino; Editing by Gopakumar Warrier)
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