Abstract
This study mainly aims to explore the current practice and prospects of FinTech start-ups financing in Oman, particularly the IFIs (Islamic Financial Institutions) financing practices and the challenges faced by these start-ups in obtaining it. The study applies qualitative methods in procedures of in-depth interviews with eight Islamic banks’ managers in Oman. The findings revealed that the financing of the FinTech start-ups in Oman still in the infant stage and below its potential. This might be due to the general lack of interest in this area by the Omani start-up businesses. This situation might be due to the lack of clear strategic vision of Omani financial institutions, including both Islamic and conventional financial institutions with regards the Fintech start-ups. The findings also showed that the start-ups in Oman prefer long term financial schemes, while the Islamic financial institutions (IFIs) generally prefer to offer short term financing on Musharakah and Ijarah contracts. Lastly, the findings showed that the IFIs are positive regarding the prospects of growth and success of FinTech in Oman. It is noteworthy that this is one of the early studies that addresses the FinTech start-ups financing from an Islamic perspective, and hence places the ground for the future studies to be conducted in this area.
Highlights
The financial industry has witnessed a great transformation since the introduction of various technological tools to improve the way the financial services are operated and offered (Alt et al, 2018)
The study initially focused on five main themes that were subsequently developed during interviews, namely, the current status of Islamic financing for FinTech start-ups in Oman, the financing schemes and arrangements offered to FinTech start-ups by Islamic financial institutions (IFIs), the FinTech start-ups Islamic financing preferences, the requirements imposed by IFIs for financing FinTech start-ups, and the potential future contribution of FinTech to the Islamic finance industry in Oman
Financing of FinTech start-ups The interviews revealed that none of the surveyed Islamic banks have received any financing application from FinTech start-ups in Oman
Summary
The financial industry has witnessed a great transformation since the introduction of various technological tools to improve the way the financial services are operated and offered (Alt et al, 2018). FinTech provides a practical solution, easy access, comfort and convenience, and cost effectiveness of financial services to both financial services providers and customers (Prawirasasra, 2018) These qualities, among others, contribute to reducing the reliance on traditional financial services, and incite customers to gradually shift towards these alternative services (Leong et al, 2017). This wave of FinTech tools developments was marked by the establishment of a significant number of FinTech start-ups in many countries.
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