What is Lease vs. Purchase Agreement

By enabling better traceability of funds against specific assets, technologies should appeal to a significant segment of the lending market – one that is religiously conscientious. Such Islamic FinTechs should therefore be disruptive for the existing regime of Islamic financial services institutions who have problems managing credit risk and compliance. Islamic financial instruments are no stranger to controversy. It emerged from the scandals that gaining investor confidence for Islamic financial instruments such as the Sukuk, which is the Islamic alternative to bonds and securities, investors demand more transparency in Sukuk to make sure they are Shariah-compliant, thus making traceability to assets a special hindrance to current schemes of Sukuk. In this chapter, the authors will discuss how technology could be disruptive in Islamic banking and finance sector keeping Sukuk as a case. The authors will further elaborate on it by discussing the proposed model of blockchain that could solve the issue of traceability which could also boost investor confidence in Sukuk.