In this short article, we want to simply define Islamic Fintech not from a user perspective, but rather from its linguistic roots. Why is it called Islamic? and What is Fintech? Keep reading!
Islamic Fintech is composed of two terms: “Islamic” and “Fintech”. We have to appreciate these two terms to get a better understanding of what is driving the Islamic Fintech industry.
What does Islamic mean?
“Islamic” is an adjective from the noun “Islam” and suffix “ic”. Islam is the universal system and order of commitment to God; it is a manifestation of submission to Almighty God in all facets of life.
Although some critique the notion of adding the adjective of ‘Islamic’ in front of various nouns, it does help in immediately identifying the class and category of whatever is being referred to thereafter. It gives context to discussions and allows the readers and listeners to acknowledge the paradigm that is being referred to and the framework of operations. At the same time, the misuse of this adjective can, at times, create a false dichotomy and a binary which can lead to an adverse outcome. The binary vision tends to lead people to conclude that something not preceded by ‘Islamic’ means that it is ultimately unislamic. This then leads to a false sense of piety and shunning of things which are absolutely permissible. In fact, it leads some to believe that anyone indulged in the ‘other’ is erroneous and wrong, or involved in the worldly (dunya) life and neglecting the Hereafter.
What are Finance and Technology?
Financial technology—Fintech for short— describes the evolving intersection of financial services and technology. Thus, “Fintech” is simply a combination of the words “financial” and “technology”. Finance refers to the management of money and includes all activities involved with money, such as investments, lending, savings, borrowing, structuring, recording, forecasting, and more. Finance revolves around activities primarily focused on money and its flows.
The word technology is a combination of two Greek words, techne and logos. Techne means art, craft, or skill. Logos means “to speak of”. Hence, we can understand the word technique which is the implementation of a skill. Whenever a technique is performed, it is technically performed. And therefore, technology is the systematic treatment of an art, craft, or technique used in the production of goods or services to accomplish goals. When Logos is added in the mix, technology can even refer to the knowledge of techniques or the ‘know how’ and encoded processes in a machine to operate. Thus, everything that we see electronic or digital – which we refer to as technology colloquially – has a system powering the processes and mechanics.
Hence, Fintech is a system of knowledge and techniques to operate finance through highly complex techniques via innovative, disruptive, and pioneering approach. And Islamic Fintech is doing all that within the Shariah universe!