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Islamic finance is rapidly evolving, with technology playing a key role in this transformation. The IFN Investor Asia Forum recently focused on the theme, "Defining Islamic Investment in a Dynamic Market - Technology, Products, and Markets." At the forum, Masverse's CFO, Seong Jiann Koay, joined a panel discussion at the Securities Commission Malaysia. Alongside industry leaders like John Welling of S&P Dow Jones Indices, Sefian Kasem of HSBC, Shahariah Shaharudin of Saturna Malaysia, and Izad Sallehuddin of Principal Islamic, they explored how AI, blockchain, and Neptune are enhancing Shariah compliance, transparency, and sustainability.
This discussion could not have come at a better time, as the global Islamic finance sector has been expanding rapidly. With Southeast Asia, particularly Malaysia and Indonesia, taking the lead in Shariah-compliant investment products, technology has become a critical factor in maintaining and enhancing compliance, transparency, and sustainability. This shift is attracting a broader pool of investors from both Muslim and non-Muslim countries. But how exactly is technology reshaping this growing market?
First and foremost, AI is being used to ensure that companies adhere to Shariah principles. During the event, Seong Jiann Koay highlighted how AI can screen and analyse balance sheets, financial transactions, and compliance reports to determine whether a company meets Shariah standards. This process, which once required manual oversight, has been vastly improved by AI’s ability to process vast amounts of data quickly and accurately.
In addition, blockchain technology is playing a pivotal role in ensuring the transparency and trust required in Islamic finance. Blockchain’s distributed ledger system provides tamper-proof data records, which means every transaction is auditable and compliant with Islamic principles. Seong Jiann emphasised that blockchain’s transparency is key to building trust in the digital world—trust that is fundamental in Islamic finance, where every transaction must align with ethical guidelines.
Another notable topic discussed during the panel was the use of Neptune, a financial tool implemented by Saturna Malaysia to enhance sustainable investing. Shahariah Shaharudin explained how Neptune automatically screens high-quality companies based on both Shariah principles and environmental, social, and governance (ESG) criteria. This integration of Islamic finance with ESG principles is not only meeting the demand for socially responsible investments but also improving long-term performance for investors.
Investors, whether seasoned professionals or new entrants into the Islamic finance world, now have access to portfolios that are both ethically sound and financially rewarding. The panellists agreed that prioritising long-term ethical compliance is always more beneficial than focusing solely on short-term profitability.
The role of ESG principles in Islamic finance was further elaborated by Sefian Kasem from HSBC Asset Management. He highlighted that combining Shariah compliance with sustainability leads to diversified portfolios that support long-term financial goals. Consequently, many Islamic finance products are now integrating ESG principles, attracting investors seeking both returns and ethical choices.
Izad Sallehuddin, CEO of Principal Islamic, noted that Shariah-compliant investments represent a solid, long-term strategy, ensuring compliance with both Islamic and ESG standards. This approach resonates with a new generation focused on ethical investments that yield strong performance over time.
At Masverse, we lead the tech shift in Islamic finance with our blockchain platform, Maschain. Our solutions enhance transparency and trust, helping investors make informed, ethical choices while ensuring Shariah compliance. As the sector evolves, we commit to shaping the future of ethical investment. Insights from the recent IFN Investor Asia Forum reaffirm our dedication to advancing this rapidly growing industry.