Abstract
Recent years have witnessed the growth of Islamic crowdfunding from its mere existence to successfully distinguishing itself from conventional crowdfunding. The concept of crowdfunding is known as a practice of funding a project or venture by raising small amounts of money from many people, typically via the Internet. The concept of crowdfunding has gained popularity worldwide as an alternative source of financing, especially among small businesses which include small and medium enterprises (SMEs). As SMEs continuously face lack of financing which may hinder their business growth, it is projected that the emerging crowdfunding model may help solve this problem while at the same time sustain SMEs' financial suitability. In this chapter, the concept of Islamic crowdfunding, crowdfunding models, the benefits and weaknesses of crowdfunding for SMEs, the applicability of crowdfunding towards driving financial sustainability initiatives for SMEs and issues for future research are discussed.
TopFinancial Technology And Crowdfunding
Financial technology (FinTech) is a combination of innovative business models and technology solutions in facilitating daily financial services. FinTech is a complex ecosystem that covers a large scope of techniques from data security to financial service deliveries (Gai, Qiu, & Sun, 2017; PwC, 2016). The emergence of FinTech has brought about tremendous development in the digital economy that can be seen through the increasing investment in FinTech companies. As of March 2018, FinTech investment in Europe and Asia had reached US$26 billion and US$16.8 billion respectively, followed by US$19.2 billion in the United States (KPMG, 2018). Country specific, FinTech is booming in China, India, the United Kingdom, Brazil, and Australia (EY, 2017). E-wallet, crypto-currency, peer-to-peer (P2P) financing, crowdfunding, and InsurTech are among the common products of FinTech and have become major financial alternatives for consumers and businesses (Capgemini, LinkedIn, & Efma, 2018; Jin, Seong, & Khin, 2019).
Key Terms in this Chapter
Small and Medium Enterprises: Businesses whose personnel numbers and profits fall below certain limits.
Fintech: New technology and innovation that aims to compete with traditional financial methods in the delivery of financial services.
Financial Sustainability: An organisation’s capacity to obtain revenues in response to a demand in order to sustain productive processes at a steady or growing rate to produce results and obtain a surplus.
Crowdfunding: The practice of funding a project or venture by raising small amounts of money from many people, typically via the Internet.