Can Islamic FinTech best serve the migrants' interest in remittance services? The South and Southeast Asian perspective

Abstract

Financial Technology (FinTech), one of the revolutionary concepts of the 21st century, has made financial transactions facile with its easier approach, and blockchain as a breakthrough technology is one of the belongings of it. Interestingly, among the applications of blockchain technology, the cross-border payment is regarded as the most promising because of its timeliness, transparency, and cost-effective features. Therefore, this chapter aims to identify whether the adoption of blockchain technology in remittance under Islamic FinTech can protect migrants’ interests. For this purpose, South and Southeast Asia, a rising hub of Islamic finance with top remittance receiving countries of the world, is taken into consideration. From the findings, it is observed that blockchain-enabled remittance transfer under Islamic FinTech can reduce fraudulent activities in the system as the operations of Islamic banks and other financial institutions are profoundly supervised and monitored by Shari’ah (Islamic law) Supervisory Board (SSB) as well as mutual monitoring by relevant participants such as SSB, government, and regulatory authorities can assist more in this case. Moreover, monetary assistance from relevant stakeholders and inclusion of more participants results in lower transaction cost in blockchain-powered remittance. Apart from this, through the reduction of informal transfer of remittance and the enhancement of financial inclusion, this system can increase money supply in the economy and create more investment opportunities.