Luxembourg-based trio partner on blockchain research to build platform for ethical, Islamic finance

Luxembourg-based Eethiq Advisors, its partner 570 Asset Management, and the University of Luxembourg’s SnT Interdisciplinary Centre for Security, Reliability and Trust have teamed up to develop a platform that can capture investment operations in line with ethical standards and Shariah requirements for client accounts.  

“The platform will be built on the blockchain protocol, and augmented with data analytics and artificial intelligence. It will then become the ‘interface’ between the banking legacy systems and the end-user clients,” Eethiq founder and managing director Rachid Ouaich told Salaam Gateway.

According to the partners, the solution aims to ensure all transactions involve the transfer of real assets and services, while at the same time ensuring that transfer and ownership is traceable, auditable, and secure at all times.

The goal, according to Ouaich, is to make the platform an open marketplace. “[This] means all clients wishing to invest through Islamic institutions’ profit sharing investment accounts should be able to choose to do it through this platform. In turn, all banks that will want to have access to those clients will have an interest in joining the programme,” said Ouaich.

ZAKAT TRACKING

The first outputs from the programme will come within the first 12 months, according to Ouaich. “One example is the use of blockchain to track charity and zakat donations and give donors the ability to track down every cent given at any point in time, with certainty that the record will never disappear, and proof that it has gone where it should have gone,” he said.

NEW GENERATION

A key aim for the platform is to serve and meet the needs of young Muslims, or ‘Generation M,’ who want financial services anywhere, anytime and without the unnecessary cost of complex structures, said the partners.

“It will also cater to Generation M’s unconditional search for services where trust and safety is never compromised,” Ouaich added.

He said the joint research programme is open to any financial institutions interested to develop the platform with the three partners. Ultimately, ownership of the platform will belong to the parties that develop it, said Ouaich.

“In a second stage, we will open up to co-investors,” he added.

For the University of Luxembourg, the initiative is part of its efforts to build a centre of research and innovation excellence in fintech, said Bjorn Ottersten, the founding director of SnT. SnT engages in long-term, high-risk research as well as demand-driven collaborative projects with industry and the public sector. It currently partners with up to 30 private and public organisations.

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