15 May, 2023
A panel of leading technology and innovation experts discussed the application of digital vouchers to help create a more financially inclusive society, during the 17th IsDB Global Forum on Islamic Finance. The forum was held on 12 May 2023 on the sidelines of the IsDB Group Annual Meetings in Jeddah, Kingdom of Saudi Arabia.
The panel session opened with a presentation on the digital vouchers by the moderator, Dr. Hilal Houssain, Team Leader, Knowledge Solutions, at IsDBI. He explained that the digital voucher is a sustainable digital system for financial inclusion and social finance. He highlighted the key features of digital vouchers.
The presentation was followed by a panel discussion on the current and future applications of digital vouchers to help create a more financially inclusive society.
Speakers on the panel were Dr. Mohamad Hammour, Chairman and MD of Guidance Financial Group, and Member of IsDBI’s Board of Trustees; Mr. Rami Al Karmi, Executive Chairman, Ab(new)normal Ventures, and Member of IsDBI’s Board of Trustees; and Dr. Peter D. Holden, Chief Corporate Development Officer, Beyond Limits Inc.
Dr. Mohamad Hammour emphasized that the digital voucher is addressing a challenge of the grant economy, and this is mainly in the creation of a market to reallocate resources efficiently within this economy enabled and enhanced using blockchain technology.
“The digital voucher model is better than stable coins for distributed financial platforms. The concept is strategically achieving its goals,” Dr. Hammour added.
“However, interoperability is very important in terms of permission blockchain where the need to qualify grantees is vital and it’s a recent realization. The gateway for the conversion of digital vouchers is recentralization. The most critical aspect in the designing of digital vouchers is that the recentralization must be targeted without creating the reintroducing of a full back-end system. So, it has to be surgically introduced, and keep the advantages of the blockchain.”
He also discussed the potential of the contribution of digital vouchers in the Islamic financial industry. He said to understand the future prospects, it is important to go back to the history of Islamic banking and finance and how it emerged in a context where the predominant modern money and banking system was based on commercial lending according to Islamic values and Sharia. Combining modern technology with the true values of Islamic finance can truly flourish.
Mr. Rami Al Karmi discussed the opportunities of digital vouchers and their existence in the research and deployment of central bank digital currency. The digital vouchers model can be applied and considered in the form of a stable coin using artificial intelligence or the smart stabilization system that allows control and minimizes the risk of failure.
Mr. Al Karmi highlighted that digital vouchers as programmable money provide a tremendous opportunity to disrupt or exponentially grow Financial inclusion and social funding. He also noted that digital vouchers can untap huge potential by allowing a developer community to build more use cases and try tackling financial inclusion and social funding through it.
Dr. Pater D. Holden addressed the issues and concerns in the implementation of digital vouchers in practice from an Artificial Intelligence (AI) perspective. Almost all Al technology processes data; it is just an enabler, that improves business processes, and enterprise processes. He said the role of AI for digital vouchers is very simple: to ensure that the right voucher reaches the right end user for the right purpose and motivation.
He noted also that combinations of various tools and platforms create opportunities for Islamic finance to grow and function to maintain its modality where conventional Islamic banking and financing are practiced.
In conclusion, the speakers observed that digital vouchers as a payment instrument are the ultimate digital transformation of the Islamic financial industry, eliminating intermediaries and improving the delivery system. The distributed ledger technology is going to be critical to Islamic finance, and it is the collective responsibility of all concerned to make use of this technology in line with the principles of Islamic economics.
More details on the 17th IsDB Global Forum on Islamic Finance available here.
You can watch a video recording of the forum on YouTube here.