Implementing the Blockchain Technology in Islamic Financial Industry: Opportunities and Challenges

Abstract

Blockchain technology is rapidly gaining the attention of financial institutions around the world, especially among decision makers in Islamic financial institutions who are planning to apply this innovative technology into their institutions activities which could be an upright solution for their issues and challenges. This paper contributes to the emerging literature on financial technology by discussing some of the innovative applications of blockchain in Islamic financial institutions. In addition, this paper sheds light on the main opportunities and challenges facing application of Blockchain Technology in the Islamic financial industry and highlight the way forward to address these issues. Relying on the previous literature and analysis; this paper confirms the enormous opportunities for utilizing blockchain technology in various Islamic financial applications such as Waqf, Zakat and Sukuk. On the other hand, the main challenges towards implementing blockchain in this industry are the complexity of Islamic finance products added to the opacity of its application which end up with unclear regulations and lack of standards.