BREAKING NEWS: IRTI Partners with Samsung Backed Blocko’s E24P to Launch Blockchain-based Smart Credit
Islamic Research and Training Institute Partners with Samsung-backed Blocko’s E24P to Launch Blockchain-based Smart Credit Management Platform to Boost Islamic Finance Sector
The Smart Credit Management System will be based on smart contracts on the Aergo blockchain. The system, once completed, will be of great value to Islamic banks and other financial institutions.
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Islamic Research and Training Institute Partners with Samsung-backed Blocko’s E24P to Launch Blockchain-based Smart Credit Management Platform to Boost Islamic Finance Sector
PR Newswire
JEDDAH, Saudi Arabia, June 15, 2020
JEDDAH, Saudi Arabia, June 15, 2020 /PRNewswire/ — The Islamic Research and
Training Institute (IRTI) of the Islamic Development Bank (IsDB) Group has
partnered with the Samsung-backed blockchain technology firm Blocko to build a
blockchain-based innovative credit enhancement system. The patented Smart
Credit Management System minimizes the risks associated with credit financing
to businesses and consumers through the use of new economic incentive models
and advanced implementations of hybrid blockchain technology.
The Smart Credit Management System will be based on smart contracts on the
Aergo blockchain. The system, once completed, will be of great value to
Islamic banks and other financial institutions. The system aims to:
* Ensure that credit assessments are performed in a provably transparent and
responsible manner, whilst keeping the data and methodology used
appropriately secure and confidential based on zero-knowledge proofs.
* Allow creditors to reduce credit default rate to improve overall business
performance and accelerate efforts in areas of financial inclusion.
* Integrate siloed functions in the financing process including credit
reporting, credit rating, credit history, and credit insurance to reduce
costs and improve efficiency.
* Act as an extensible architecture that can allow multiple banks to
collaborate on a consortium network to manage credit and insurance in a
decentralized, autonomous, and strictly-governed way.
“The Islamic finance market is growing rapidly, with projections of a rise
from around $2 trillion to an impressive $3.78 trillion by 2022. Yet certain
technical and economic challenges have prevented the industry from truly
flourishing,” said Dr. Sami Al-Suwailem, Acting Director General of IRTI, on
the new partnership. “Our new partnership with E24P aims to address this need
by providing the infrastructure needed for the Islamic financial industry to
deliver critical services to both the developed and developing world.”
The partnership aims to leverage the E24P blockchain teams’ deep expertise in
deploying blockchain systems to further the IsDB’s mission of enabling greater
financial inclusion, alleviating poverty, and accelerating the development of
the Islamic financial industry.
Commenting on the partnership, Phil Zamani, CEO of E24P, said: “We are honored
to be working with IRTI to help them deliver a truly unique solution that has
the potential to have a significant impact on the Muslim world. The
implementation of blockchain systems in complex processes like credit and
insurance has long been sought after by financial institutions around the
world. Forward-thinking GCC countries, such as the UAE and Saudi Arabia, have
been especially progressive, implementing blockchain projects to accelerate
their digital transformation agendas and smart city innovation strategies.”
How the Smart Credit Management system works
Shari’ah law prohibits banks from charging interest on loans to their
borrowers. Islamic banks offer financing to individuals and businesses through
real economic transactions such as joint ventures, deferred sale, and leasing
agreements. In offering credit financing, Islamic banks need a mechanism to
discipline debtors to pay on time. A common practice involves charging debtors
with late fees which are then donated to charity . However, because Islamic
banks are not allowed to incur any profit and in turn any benefit from these
late-payment charges, they are not incentivized to collect these fees and
distribute them to charitable organizations in a timely manner. At the same
time, because debtors see these late fees as an act of charity, their sense of
urgency to pay their debt obligations on time might diminish.
The new system being developed by IRTI and implemented jointly by IRTI and
E24P will solve these problems through a novel incentive mechanism that
encourages early repayment and contributes fees to an insurance pool that
covers involuntary credit defaults. Such a system is not feasible through
conventional arrangements but is facilitated through the use of
high-performance blockchain technology.
Why did IRTI partner with E24P?
Many blockchain projects fail to move past the initial proof of concept (POC)
stage due to a lack of end-to-end systems design know-how that is coupled with
practical implementation of blockchain technology in highly complex industrial
environments. The E24P team has the advantage of having already deployed over
38 large-scale private and government blockchain solutions, and this execution
intelligence is needed to bypass cost, draw out POCs to fast track to business
value implementations.
About Islamic Research and Training Institute (IRTI)
The Islamic Research and Training Institute (IRTI) is a Member of the Islamic
Development Bank (IsDB) Group dedicated to knowledge creation and
dissemination in Islamic Economics and Finance. With a track record of nearly
four decades of delivering cutting-edge research and capacity development
programs, IRTI works to develop innovative knowledge-based solutions and
enhance human capacity in Islamic Economics and Finance for the sustainable
development of IsDB member countries and Muslim communities in non-member
countries worldwide.
About Islamic Development Bank (IsDB)
The Islamic Development Bank (IsDB) Group is a multilateral development bank
with over $50 billion in assets under management, operating in over 57 member
countries across Europe, Asia, and Africa. The IsDB works to promote
Shari’ah-compliant financing structures in Muslim countries, develop
technology and innovation solutions that align with UN Sustainable Development
Goals, build partnerships between the private and public sector, facilitate
greater degrees of skills and knowledge sharing among member countries, and
foster collaboration between nations to support sustainable development.
About E24P
Based in Abu Dhabi, E24P is a collective of technology experts, distributed
financial services providers, state-level government sponsors, and leading
research institutes in the UAE and the UK working with clients in high-growth
economies and sectors across the Middle East, Africa and South East Asia. E24P
delivers cutting-edge innovations in disruptive technologies to public and
private sectors, generating economic opportunities that improve social
outcomes, exploit new business models, and eliminate inefficiencies for
governments through the creation of new digital ecosystems. E24P is deploying
the next wave of high-scale, high-security blockchain use cases built on Aergo
technology by leveraging bleeding-edge innovations in quantum computing,
lattice cryptography, trusted computing, data custody, smart tourism and smart
identities, cybersecurity and energy-efficient technologies.
Contact: Lara Gordon Finnih | lara@ih-c.com | 00971528769140 ; For more
information on this project, please contact Dr. Hilal M. Houssain
(hhoussain@isdb.org)
