Alibaba and The Islamic FinTech Ecosystem – August 2019 Updates

Tech For Inclusion

Innovative technology is driving a storm of disruption in the financial industry at a scary pace. Financial Technology or FinTech has been a strong enabler for digital in many countries – and at the top of the innovation pyramid is China, which houses two of the worlds largest FinTech companies Wechat and Alibaba. Alibaba was founded in 1999, and after 20 years of operations, recently bid farewell to its retired chairman and founder Jack Ma. The Alibaba Group has brought integrated financial products and commerce to the fingertips of communities all around the world through its app Alipay which now serves over 1 billion users worldwide. Alibaba achieved this in 20 years by being technology-driven. Today we are witnessing many FinTech companies like Alibaba rolling out products that are shaping tomorrow’s society, bringing connectivity and convenience to some of the most remote communities around the world. But what about the Islamic FinTech industry?

Here we ask 2 questions; How can Islamic FinTechs learn from Alibaba’s success to bring inclusive financial services to a potential of 3 billion underserved? and Is the Islamic FinTech Ecosystem matured enough to produce startups which can inspire such innovation on a large scale like Alibaba? Surely the Islamic FinTech industry has a headstart through participation and capital from Zakat and Waqf institutions. Right?

Lessons To Learn From Alibaba’s Business Strategy

Ant Financial hosted the inaugural 10×1000 Tech for Inclusion program in partnership with International Financial Corporation (IFC) and MDEC. Ant Financial is the financial services arm of the Alibaba Group and operator of Alipay. The vision behind the 10×1000 Tech innovator workshop was to inspire 10,000 technology entrepreneurs in 10 years. Throughout the workshop, Ant Financial shared with us the story of Alibaba’s journey from being a B2B eCommerce founded in 1999 to becoming a company that is valued over USD $500 billion today; and is well on the way to being a trillion-dollar company, all of this achieved by being a technology and innovation-driven company. It was a hugely beneficial program and we are grateful that Wakaful was able to participated in this 5 day workshop in Hangzhou at Ant Financial HQ alongside participants from amazing companies such as Vsure, PolicyStreet, Aruna, Wika Media, Erth, and Ipay88 to name a few.

Here are some of my notes on how Alibaba managed to achieve this. I’m sharing these learning points that may be it can inspire other Islamic FinTechs to learn from Alibaba’s success.

  • Alibaba set up ‘Taobao villages’ in 2014. Taobao Villages are warehousing, collection and distribution centres that were set up to serve many of the Alibaba suppliers in strategic locations around China. By being physically present in the village, Alibaba established a relationship of trust by enabling entrepreneurs in each village and connecting them to Alibaba’s value chain. These Taobao villages later served many other functions to Alibaba’s entrepreneurs, enabling KYC integration, logistics, and then later rolled out financial services to their community in the most remote locations in China.

  • Alipay was initially set up as a third-party escrow service between buyers and sellers on the Alibaba e-commerce platform solving the trust issue between the counter-parties. Today AliPay has over 1 billion users worldwide, over 700 million of them in China. Ant Financial then rolled out other financial services to the public, providing credit, credit scoring, alternative insurance, green financing, money market investment products, payment services for almost all types of commerce to the public, enabled by cloud computing. deep learning and AI.

  • One thing that stood out is Yue’ Bao product on the AliPay app, which provides money market investment instruments through spare cash management. Which basically means that AliPay users can open mini savings accounts through the Alipay app by putting their spare change and balance from transactions into this account, and those funds are then invested in the money markets for all their users by partnering with investment firms, making them the Uber for investments. Alipay as a payments app, is now taking deposits from the public and providing wealth management services, without ever owning a fund management company !

Overall, it was inspiring to be around learning from fellow entrepreneurs, and experts from workshops that Ant Financial organised. We learned profoundly about how Alibaba drives inclusion through technology.

Islamic Finance University INCEIF Creates a Platform for Islamic FinTechs at Innofest 2019

Earlier we asked whether the Islamic FinTech ecosystem is able to inspire & produce startup innovation at a similar scale with Alibaba and whether the Islamic Fintech Ecosystem is up for the challenge. My opinion on this matter is that the Islamic FinTech ecosystem needs to step up, we need more ecosystem players working together, more grants, innovation competitions, more pre-seed and seed investment, accelerators, incubators, VC, PEs and more.

Innofest 2019 is an example of an important pillar of the Islamic FinTech ecosystem and is a great platform for pre-seed startups to bring out their projects to the eyes and ears of experts in the Islamic Finance industry. Innofest 2019 was hosted in the month of August, organised by INCEIF & Bank Negara Malaysia in partnership with MaGIC and IsDB as a platform to bring innovative Islamic FinTech ideas to the centre stage by hosting an Islamic FinTech innovation challenge. Wakaful pitched at Innofest 2019 and…..


Wakaful Won First Prize !

Its programs like these that can catalyse and inspire the merging of Islamic Finance and technology We hope to see more competitions like these that can mobilise innovation and help the Islamic FinTech sector to properly define it self. Congrats to the winners of the Islamic FinTech Innovation Challenge, Sudu Nest a social financing platform that seeks to provide support to MSMEs through central shared kitchens and MaTa a micro-takaful product that is rolled out through mosques, both concepts have serious potential!

Lastly, here is a call to action if you are an investor, accelerator, research institute, or innovation hub that seeks to get connected to the Islamic FinTech ecosystem, you may reach out to our founders here or any of our social media platforms through links below.