This TowerGroup Research Note provides a background on Islamic banking and products that are compliant with Islamic law, or Shari'ah. The Note also identifies vendors that provide core processing support for Islamic banking products and discusses the issues faced by vendors. Lastly, the recent core systems implementation effort at an Islamic bank is presented.
TowerGroup Take-Aways:
• A growing number of both Islamic and non-Islamic people worldwide are seeking banking products based on Shari'ah (Islamic law), a major tenet of which is the prohibition of interest.
• Modern Islamic banking traces its roots to initiatives in Pakistan in the 1950s; the first successful ventures occurred in Egypt and Malaysia in the 1960s.
• Banks rely on Islamic scholars to interpret Islamic law and ensure that a proposed product will be considered compliant with Shari'ah.
• Core vendors seeking new business in predominantly Muslim-populated countries must provide support for Islamic banking.
• A number of leading global core systems vendors, including i-flex solutions, Misys, Infosys,
Systems Access, Tata Consultancy Services, and Temenos, now offer support for Islamic banking.
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