I enjoy
pre-sales presentations. I have presented to banks in Malaysia, Indonesia,
Brunei, Thailand, Singapore, the Philippines, Sri Lanka, Kazakhstan, the United
Arab Emirates, Bahrain, Jordan, Egypt, Iran, Sudan, Qatar, Oman and Saudi Arabia.
While presenting the information technology (IT) system flexibilities,
features, and functions to my audiences, I would explain which part of the
system that is sensitive to Shar iah requi rement s. I would also emphasise as
to how the system supports a variety of Islamic products and services.
One common
query: Is the IT System Shariah-compliant? To my amusement, some people even
ask whether the system had been certified halal? Some even request proof
ofShariah certification papers. Can an IT system (software) be certified halal
or Shariahcompliant?
Here are my
two sen worth as an IT specialist who is passionate and academically qualified
in Islamic banking and finance. In my opinion, there is no such thing as a
Shariah-compliant IT system.
The IT
system is only an enabler to support financial institutions to deliver products
and services. The system does not dictate the features and functionalities of
banks’ products and services. Rather, it is the other way around. The
requirements of products and service of Islamic banks dictate system
functionalities.
Before
Islamic banks can offer products and services to the public, they have to
obtain the approval of their Shariah boards. Shariah board members will
scrutinise the products and services to ascertain whether they comply with
their Shariah guidelines. Once endorsed by the board, the products or services
are ready to be configured into the system.
Of course,
the system would have to be built with features and functions to support the
requirements of the products and services. Once configured into the system,
system users will have to perform user acceptance test to verify that the
system is behaving according to their requirements.
Based on my
experience in implementing IT systems in many banks over the years,
Shariah-compliant requirements is quite subjective as it depends on
interpretations. It also depends, to a certain extent, on the strictness of the
Shariah board members of the banks. This results in certain requirements being
considered as Shariah-compliant in one bank but not in another. I have
encountered various scenarios.
Take the
case of the restructuring of Islamic financing. A local industry practice is
that the bank and customer will sign a new set of legal documents when a
financing account is restructured. This is to renew the contract (aqad).
While the
signing of new legal documents is the common practice, I have encountered
differing requirements on the system handling of restructured financing. One
bank requires for the old financing account number to be retained while another
bank requires a new account number to be generated. Both have valid arguments
to support their requests.
Since the
interpretations of Shariah requirements may differ from one bank to another, it
is not practical to expect an Islamic banking IT system (a piece of software)
by itself to be certified as Shariah-compliant. At best, the Islamic banking IT
system can be made flexible with configurable parameters and workflows to cater
for different “practices” of Shariah requirements.
In
conclusion, while the IT system by itself cannot be certified as
Shariah-compliant, the behaviour of an instance of IT system, duly configured
with Shariah compliant products and services requirements, can be certified as
Shariah-compliant through a comprehensive user acceptance test process.
[Othman
Abdullah’s SHARIAH TECH column in THE MALAYSIAN RESERVE (26 May 2014). Othman
is the Silverlake Group of Companies MD for Islamic banking, responsible for
Silverlake Axis Integrated Islamic Banking Solution product development,
marketing support and implementation services]
