(Reuters) - The research arm of the Islamic Development Bank 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 focused 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
The Islamic Development Bank's research branch, sharia certification, aims to utilise blockchain technology to create sharia-compliant financial products. The Institute has agreed to work with digital solutions firm Ateon and blockchain minting firm SettleMint, with the first stage of the project being a technical feasibility study. The bank hopes to meet Muslim investors' demand for blockchain-based products with the Islamic Research and Training Institute, as competition develops across the world. The move could also encourage fintech firms to include Islamic finance in their considerations across the Middle East, Africa and Asia.