Tuum, the innovative core banking provider, has unveiled its new Islamic Banking and Finance solutions, setting the stage for a significant shift in how financial institutions can offer Sharia-compliant services.
This launch comes at a time when the demand for ethical, Sharia-compliant banking services is on the rise. Tuum is positioning itself to cater to this growing market by creating a platform designed to meet the specific needs of Islamic financial institutions. The new offerings focus on two foundational aspects of Islamic banking: Islamic deposits and asset-based lending.
Tuum Lays the Groundwork for Islamic Finance
Tuum’s new Islamic banking solutions aim to establish a robust foundation for Islamic finance, ensuring full compliance with Sharia law. At the heart of this initiative is the integration of a profit-sharing system, a key principle in Islamic banking.
The platform’s Minimum Viable Product (MVP) will allow financial institutions to begin offering Sharia-compliant products almost immediately. This marks the first step in what Tuum envisions as a comprehensive suite of Islamic financial services.
One of the central elements of the solution is the development of Islamic deposits based on the concept of Mudarabah, a profit-sharing model. Unlike traditional banking systems that rely on interest-based income, Mudarabah allows both the bank and the depositor to share profits generated from ethical, real-world investments.
Key Features of the Islamic Deposit Solution:
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Sharia Compliance: The system ensures that all profits generated align with Islamic law, avoiding interest (riba) and focusing on ethical investments.
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Transparency: A clear, predefined profit-sharing agreement enhances trust and clarity between banks and their clients.
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Scalable Growth: The system provides a solid foundation for future expansion and can easily be adapted to various Islamic finance models.
Tuum’s solution is designed to help banks offer a diverse range of products, from savings accounts to investment opportunities, all within the guidelines of Islamic financial principles.
Building a Sharia-Compliant Asset-Based Lending Framework
Alongside its deposit solution, Tuum is also introducing an Islamic asset-based lending system. This system is designed to comply with the prohibition of riba (interest), a core tenet of Islamic finance.
Instead of relying on interest-based loans, Islamic lending must be tied to tangible, real-world assets. Tuum’s asset-based lending framework ensures that banks can offer financing solutions that are both ethical and practical.
The key elements of this framework include:
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Sharia Compliance: All lending is conducted in accordance with Islamic principles, with each loan backed by a real asset.
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Profit and Risk Sharing: The financing structures are designed to share both the risks and profits, ensuring fairness in every transaction.
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Scalable Growth: Tuum’s platform is built to grow with the market. It will eventually support various Islamic finance models, including Murabaha, Ijara, and Musharakah, helping to create a comprehensive Islamic financing ecosystem.
This focus on asset-based lending addresses the core needs of Islamic financial institutions, providing them with the tools to offer fair and ethical financing solutions.
Shaping the Future of Islamic Banking
Tuum’s new platform doesn’t stop at deposits and asset-based lending. The company’s long-term vision is to develop a full suite of Islamic financial services that meet the needs of today’s financial institutions.
As Tuum continues to refine its platform, it’s clear that the company is not only responding to current demand but also anticipating the future direction of Islamic banking. Tuum’s emphasis on scalability and flexibility ensures that its platform can evolve as new needs arise, keeping financial institutions at the forefront of innovation in Islamic finance.
Key Points to Watch:
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Innovative Platform: Tuum’s platform offers flexibility for banks to move beyond traditional banking, with a range of pre-configured partner solutions available.
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Business Transformation: By allowing banks to configure their operating, sourcing, and distribution models, Tuum is empowering financial institutions to better capitalize on digitization opportunities.
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Speed to Market: Tuum’s approach to migration ensures that banks can transition from legacy systems in as little as seven months.
The platform’s ability to adapt and scale will allow banks to stay competitive, offering a full spectrum of Sharia-compliant financial products, from deposits to asset-based lending and beyond.
