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ICD of Saudi Arabia to introduce blockchain-based Islamic banking solutions

The Islamic company based in Saudi Arabia for private sector development (ICD) has signed an agreement with a fintech company based in Tunis to develop blockchain solutions for Islamic banks, it was announced.

In a statement, the ICD – which is the private sector branch of the Islamic Development Bank Group – said it had signed an investment agreement with I-FinTech Solutions (IFTS) to develop a pipeline of products designed primarily to resolve liquidity management problems.

The first scheduled product will be a real-time platform that facilitates the transaction of real assets and will solve inter-bank issues between Islamic and conventional bans in a manner compliant with Sharia.

According to ICD, using the blockchain the product will reduce the overall execution time and cost of the financial and commercial transaction. Furthermore, it is also expected to improve the transparency and traceability of transactions.

"IT will always play an important role in the financial system," said Ayman Sejiny, CEO of ICD. "We will constantly follow our service orientation strategy and will help our partners with the innovative Fintech compliant Sharia solution."

Currently, Islamic banks are largely limited by the money markets and by the fruitful financial instruments provided by central banks, which could prove to be disadvantageous during a liquidity crisis.

Last week, Al Hilal Bank, headquartered in the United Arab Emirates, became the first Islamic bank in the world to use blockchain technology for the resale and establishment of an Islamic Sukuk. According to the CEO Alex Coelho, technology will pave the way for smarter "smarter" digitized Sukuks, one of the fastest growing asset classes in recent years.

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