Abdullo Qurbonov, one of many founders of the profitable fintech financial institution Alif Financial institution in Tajikistan, has revealed plans to enter the UK (UK) market in an interview with Asia-Plus. Though the opening of a full-fledged financial institution continues to be in progress, Ayan Capital has reportedly already begun offering Islamic financing companies for authorized entities and particular person entrepreneurs.
Q. How did you resolve to open an Islamic financial institution within the UK, and what was your motivation?
A. Proper now, it’s untimely to speak about opening an Islamic financial institution within the UK. We’re simply starting an extended and complicated journey towards this objective, however we imagine it’s potential.
Our journey began in Tajikistan. The method of acquiring a license was comparatively fast—we managed to get our first license in 2014 in simply three months. Few international locations on the earth permit acquiring a central financial institution license in such a short while.
The banking regulatory system in Tajikistan is favorable for fintech and innovation. Subsequently, we may adhere to our inside ideas and necessities inside the framework of conventional banking laws. We created a lot of Alif from scratch, together with our personal banking know-how platform, core banking system, CRM, fee methods, cellular functions, and so on. Because of the folks, improvements, IT methods, and merchandise we developed at Alif, we imagine we are able to change into a worldwide chief in Islamic fintech.
Muslims make up about 25% of the world’s inhabitants, however among the many 1.7 billion folks with out entry to banking companies, 47% dwell in Muslim-majority international locations.
The monetary sector is strictly regulated, and most companies require a banking license. We studied many international locations and located that in most, foreigners can’t independently open a financial institution. Usually, a neighborhood key shareholder is required.
Moreover, in lots of international locations, the minimal required capital for acquiring a banking license could be very excessive—from US$50 million to US$100 million or extra.
Within the UK, nevertheless, a neighborhood shareholder is just not required, and the minimal capital is about US$5 million. The UK can be the middle of Islamic finance within the West, with property ten instances larger than these in the USA. The Muslim inhabitants can be rising: 6.5% of the full inhabitants (4.9% ten years in the past). Subsequently, the UK is well-positioned as a possible bridge for the Islamic monetary world.
Our analysis confirmed that Islamic banks within the UK don’t sufficiently meet market demand—their mixed property are about $9 billion, whereas the nation’s complete banking sector is over $9 trillion. We imagine we may help the trade develop sooner, which is why we determined to broaden our operations right here.
Q. What’s the story behind the creation of Ayan Capital, and what did you resolve to concentrate on?
A. We had been searching for the quickest approach to take a look at our hypotheses with out spending 3-4 years acquiring a banking license and risking potential errors. Our analysis revealed that it’s potential to offer enterprise financing and not using a full lending license by registering with the FCA. We thought-about numerous areas of enterprise financing and finally targeted on one particular area of interest: financing particular person entrepreneurs concerned in personal passenger transportation, corresponding to Uber and Bolt drivers.
Q. Why this section?
A. Firstly, native transport authorities actively promote the transition to environmentally pleasant autos—electrical and plug-in hybrid vehicles. These autos are costly and require financing, averaging round US$40,000.
Secondly, drivers achieve many advantages from switching to those autos—they will save on numerous charges, corresponding to congestion fees, and earn extra as Uber provides higher charges for electrical car drivers.
Thirdly, about 70% of PHV (Non-public Rent Car) drivers within the UK come from Muslim international locations—primarily Pakistan, India, Bangladesh, Somalia, Afghanistan, and so on. Nonetheless, no firm providing automotive financing supplies companies consistent with Islamic finance ideas.
Fourthly, this section is kind of massive: there are over 400,000 PHV and taxi drivers within the UK. Uber has about 50,000 autos in London and goals to have 100% of those autos be electrical by the top of 2025. At present, solely about 20-25% are electrical, which means round 40,000 autos nonetheless must be transformed.
Assuming that 70% of those drivers would like Islamic financing and that every automotive prices round US$40,000, this market would require over US$1 billion in financing within the subsequent two years.
Lastly, these drivers are thought-about companies—they supply companies and generate earnings. Contemplating all this, we determined to start out with this section and regularly broaden our companies. We calculated that if we serve this market with decrease capital prices, we are able to provide higher service at a cheaper price.
The Islamic facet of financing is only one component of our providing. We additionally pleasure ourselves on offering a really excessive stage of customer support.
Q. What challenges did you face when beginning and creating Ayan Capital, and what steps had been taken to beat them?
A. Launching the product was the primary main problem. Many individuals on our crew have been working 70-90 hours per week underneath unsure situations. Earlier than the product launch, it felt like shifting by means of thick fog: we had been uncertain if we’d encounter obstacles. Nonetheless, we needed to maintain working, discover options, and keep alert. Progressively, the scenario has change into clearer.
In the meantime, Raisin says as Islamic banking turns into extra in style, the variety of UK banks providing Sharia-compliant merchandise can be rising. Round 20 banks within the UK now provide Islamic monetary services, and 5 of those banks are totally Sharia-compliant.
In actual fact, the UK is taken into account a frontrunner in Islamic banking amongst Western international locations, and has the very best Islamic Finance Nation Index rating of any European or non-Muslim majority nation.
Establishments together with QIB UK, Gatehouse Financial institution and Al Rayan Financial institution are simply among the banks that provide Islamic finance companies within the UK, though there are numerous extra to select from.
