Digital tools can support this by lowering costs and speed up Shari'ah-compliant transactions.
The Bahrain-based General Council for Islamic Banks and Financial Institutions (CIBAFI), said that Islamic trade finance is poised for change with the launch of new products and common standards as Islamic banks look to grab market share away from traditional lenders, reported Reuters.
In a report, CIBAFI said that growth in global trade is increasing business opportunities in Southeast Asia as well as MENA region where Islamic banks are active.
The report said that financial engineering is a segment where Islamic banks and Islamic financial institutions need to deploy the required resources to develop trade finance products responding to the fast-changing market dynamics.
Islamic trade finance is estimated at around $186 billion, compared to the $4.4 trillion worth of trade finance activity in Muslim-majority countries, added CIBAFI.
MENA region is seeing an increase in Shari’ah compliant digital tools. Last week, Maalem Financing partnered with Path Solutions to implement a new Islamic banking platform, iMal as well as Emirates Islamic Bank which recently launched an online supply chain tool.