- The research side of the Saudi Arabian Islamic development bank group is looking to develop a blockchain based smart credit management system.
- In order to make this a reality, the islamic research and training Institute of the bank has teamed up with Samsung backed blockchain provider Blocko.
The research side of the Saudi Arabian Islamic development bank group is looking to develop a blockchain based smart credit management system. In order to make this a reality, the islamic research and training Institute of the bank has teamed up with Samsung backed blockchain provider Blocko. This new collaboration will come as a part of the E24P regional consortium which will be launched by the provider across the Middle East, Africa and Southeast Asia.
By 2022, the Islamic finance industry is related to grow to just shy of $4 trillion. The director-general of this Institute, Dr Sami Al Suwailem said that there are still numerous technical and economic hurdles to get over that prevent the industry from truly flourishing. Islamic banks do not charge interest on loans or penalised long defaulters unlike traditional financial organisations in the western world. Instead, they charge a late fee that is supposedly donated to a charity.
Despite this, this is an approach that is riddled with issues. It eliminates the urgency for borrowers to pay back their loans and banks can also have the obstacle of trying to officially distribute the late fees to charities.
E24P and the Training Institute have been developing a smart credit management system that will be based on this Aergo hybrid blockchain and is believed to put an incentive mechanism in place to encourage borrowers to pay back the loans in a timely manner. This blockchain credit system is set to help both Islamic banks and other financial institutions conduct credit assessments in a more secure and transparent manner.
It will be interesting to see how this situation plays out. For more news on this and other crypto updates, keep it with CryptoDaily!
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