Africa's Digital Banking Transformation Integrates Islamic Finance Principles into Modern Platforms

Africa as a continent is carrying out a transformation in its financial and digital landscapes, with the rapid adoption of digital banking and the development of market innovations like Sharia-compliant online services.

Africa is witnessing a transformation in its financial and digital landscapes, with the rapid adoption of digital banking and the development of innovative solutions like Sharia-compliant online services. This shift is particularly evident in Kenya and Somalia, where financial inclusion efforts are taking on a new dimension by integrating the principles of Islamic finance into modern digital platforms.

In Kenya, emerging digital identity innovation around proxy verification and Sharia compliant identification is active, as reported by Medium. Initiatives such as the National Integrated Identity Management System (NIIMS) aim to provide a digital identity for every citizen, designed to streamline access to services and improve financial inclusion. Craft Silicon, a Kenyan fintech company, is also focusing on developing digital banking software that caters to the needs of the unbanked population.

Craft Silicon’s platforms facilitate mobile banking, enabling users to conduct transactions, access loans, and make payments through their phones. The company’s commitment to innovation extends to developing Sharia-compliant products, ensuring that their services are accessible to all segments of the population. This focus on inclusivity has helped Kenya integrate digital ID systems with financial services to improve financial inclusion.

In Somalia, the country’s efforts to rebuild its banking system after decades of instability have seen a strong emphasis on Sharia-compliant banking. According to Horseed Media, East Africa’s Salaam Bank, in partnership with Paymentology, has introduced a co-branded, tokenized tap-to-pay digital companion card along with a physical card for users of its Waafi mobile money app. Somalia’s journey towards financial inclusion has been enhanced by mobile banking.

A global player adapting to local needs

The global blockchain technology company IOTA also recognizes the importance of Sharia compliance in expanding its reach in markets like Africa. IOTA’s recent certification as Sharia-compliant underscores the company’s commitment to adhering to Islamic finance principles, making its technology more appealing to Muslim-majority countries.

“Shari’a compliance significantly benefits the IOTA Ecosystem DLT Foundation by enhancing its credibility and ethical standards, which are essential for promoting IOTA technology and the IOTA token within Muslim communities,” says Dominik Schiener, co-founder and chair of the IOTA Foundation.

“This compliance supports the Foundation’s work in helping grow and nurture DLT and blockchain projects in the Middle East, including homegrown initiatives and external projects seeking regional entry.”

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