To cater to Muslim investors, several Islam-friendly fintech startups have launched digital banking products that comply with Sharia law.
These apps play by stricter rules than their agnostic peers.
But there’s also a huge upside for these apps — the massive market of 1.8B Muslims (20% of the world’s population, if you’re counting).
Most banks aren’t halal (AKA “religiously acceptable”)
According to Sharia law, practicing Muslims must follow specific guidelines when banking:
- They must not pay or collect interest
- They must not participate in unequal transactions
- They must not make unethical investments
Since most Western banks allow all of those things, it can be tricky for Muslims to invest with traditional banks.
So Islamic fintechs are offering new options
Startups Niyah (United Kingdom) and Insha (Germany) guarantee that their customers’ cash won’t be invested in dirty industries like alcohol, porn, betting, tobacco, or pork.
And a UK startup called Qardus also offers peer-to-peer lending that’s religiously permissible.
These startups still face an uphill battle
Sharia is complicated and expensive, and 50% of UK Muslims don’t even use Sharia-friendly banks.
But if these morality-motivated fintech startups succeed, they could signal a future where a wider variety of “ethical” banks — like Triodos, Bunq, or Shorehouse — cater to users with varying beliefs.