The move comes as the global Islamic banking sector continues to defy the downward trend and expands its global presence. According Thomson Reuters, Islamic finance assets is expected to reach $3.9 trillion (Dh14 trillion) by 2023, up from US$2.2 trillion (Dh8 trillion) in 2016, despite the Covid-19 pandemic.

Islamic banks with strong Shariah compliance and real asset-backed lending, have emerged stronger after every financial crisis that have exposed the weaknesses of the conventional banking systems. That’s why, the number of Islamic banks have been and will continue to grow in the coming years. A solid core banking solution could help Islamic banks perform better.

The Islamic banks and financial institutions, however, will need to migrate to a more advanced artificial intelligence-powered core banking system that can cope with the financial technology-enabled products and solutions that are disrupting the banking and payment systems globally.

“With the Fourth Industrial Revolution disrupting the financial sector, the Islamic banks need to migrate to the new-generation core banking solutions that could synchronise with the new fintech solutions without disrupting the overall banking system,” Mahmud Hossain, Chief Executive Officer of Millennium Information Solution FZ-LLC (MISL).

“That’s why, we have set up our international operations at the Dubai International City to approach majority of the Islamic banks and help them migrate to our state-of-the-art core Islamic banking system – Ababil – a game-changing solution for the Shariah-compliant banking sector.

“We believe, most of the existing core banking systems will become obsolete with increased fintech disruption and banks will have to migrate to the next-generation systems in the next 3-5 years. Those who fail to do so, will lose the race and lose business in the more competitive financial world.”

Ababil, which has been implemented in 500 branches of 14 banks and non-banking financial institutions (NBFIs), is an end-to-end advanced core-banking solution for Islamic banking that covers all areas of Shariah-compliant banking. The main engine of Ababil was ground up designed as an Islamic Shariah compliant solution, not a by-product of a conventional banking application. Today, Ababil, which is tested at IBM’s Bangalore Laboratory and backed by Oracle RDBMS and Open platforms, is used by some of the major Islamic banks and Islamic financial institutions.

Banks aiming for growth in the Islamic banking sector need dedicated Islamic core banking systems with sharia-compliant capabilities, according to Gartner. “Vendor offerings have now matured to the point that they offer true differentiation via adaptation to the sharia board, business functions and Islamic localization,” Gartner said in a report published earlier.

Ababil, the flagship product of MISL, is one such product that also has upgraded its product suites to cater to the future needs of the Islamic banks using the state-of-the-art technology platforms such as Java micro services and Kafka, a distributed streaming platform.

The growth of the Islamic banking and finance sector will be driven by Islamic fintech start-ups, according to reports.

“The large established financial institutions are embracing the change, with 74 percent of financial institutions investing in data analytics, 34 percent in Artificial Intelligence (AI), and with 77 percent expecting to adopt blockchain by 2020,” says the Islamic Fintech Report published by Dubai Islamic Economy Development Centre (DIEDC), said in 2018.

Islamic fintech has substantial room for growth, however, with largely unaddressed opportunities in several areas, the three most significant of which are: (1) the leveraging of big data and AI in providing Islamic banking services; (2) the use of blockchain in facilitating the growth of Islamic trade finance, which at $186 billion is a fraction of the global $12 trillion trade finance industry; and (3) the use of AI in facilitating investments, in particular addressing institutional investor needs, the report said, identifying the gaps.

Shaikh Abdul Karim, an Islamic banking specialist with more than 35 years’ experience in the banking sector, including 20 years in Islamic banking sector, says, “Core Islamic banking product suites such as Ababil are crucial solutions that could fix these gaps in the industry and ensure that the banks migrate to the next level of digitisation.

“As we embrace the Fourth Industrial Revolution, fintech will drive the future growth of the banking industry powered by blockchain, big data analytics, artificial intelligence and robotics. In future, banks will become branch-less with face-less transactions becoming the norm – the deployment of advanced core banking solutions will determine efficiency and leadership in the sector. With Ababil suite, Islamic banks could lead the new era of digital banking.

“With our international operations based in the Dubai Internet City, we are getting ready to expand our suites of core banking solution Ababil, human resources solution Sylvia and risk-based auditing solution Tahqiq – to the banks and businesses in the Middle East, Africa and Central Asian countries,” concludes Sheikh Abdul Karim, Advisor and Senior Consultant to MISL.

Ababil offers wide range of software solutions to Islamic banks and Islamic financial institutions in order to tackle all their operational requirements. Ababil’s state-of-the-art technology, highly integrated front and back office system comes with a comprehensive solution package along with the ability to provide modular Islamic banking solutions which addresses all business functionalities of the client banks and financial institutions.

In line with today’s economic growth, Ababil has seen continuous improvements in the way Islamic Finance is implemented and improvised. 

The unique strength of Ababil is the fact that Islamic Shariah based business logic of this product gained maturity with the involvement and input of Shariah Scholars from home and abroad, renowned bankers and field level users since the inception of the product. It also became robust through repeated field tests. 

The solution suite of Ababil includes full support to various functions, some of which includes Corporate and Retail Banking, Investment Banking, Financing Origination System, Customer Information File (CIF), Trade Finance, Treasury Management, Agent Banking, Offshore Banking, Profit Distribution, Accounting & MIS, Payroll, Drilled Down Reporting, etc.

In addition to Ababil, MISL is also promoting it latest human resources solution Sylvia and risk-based auditing solution Tahqiq – to the banks and businesses in the Middle East, Africa and Central Asian countries.