Technology venture capital firm Fatfish Group (ASX: FFG) has announced the incorporation of a new wholly-owned subsidiary named iHarap Sdn Bhd to undertake digital Islamic financing business in Malaysia.
Fatfish said the company name is derived from the local Malay word ‘harap’, meaning hope, with iHarap loosely translating to ‘I hope’. The company intends to develop a technology platform to offer “ethical Islamic financing products” to end consumers.
This new subsidiary will complement Fatfish’s existing buy now pay later (BNPL) rollout in South East Asia, which has been accelerated by the recent 85% and 55% respective acquisitions of Malaysian payment gateway providers Forever Pay and Pay Direct Technology.
In today’s announcement, Fatfish said it will utilise existing tech components and capability to boost the development of iHarap, including sharing common tech components and back-office operations as the South East Asian BNPL services.
Fast-growing Islamic financing market
Islam is the most widely practised religion in South East Asia, with more than 275 million Muslims translating to approximately 42% of the entire population.
Islamic finance is one of the fastest growing areas in the global finance industry with Islamic finance assets amounting to US$2.88 trillion (A$3.7 trillion) in 2019 – the highest recorded growth for the industry since the Global Financial Crisis.
According to research by American investment bank BNY Mellon, Islamic finance assets are expected to continue their strong growth trajectory to reach US$3.69 trillion (A$4.74 trillion) by 2024.
Fatfish said it chose to launch iHarap in Malaysia as it is among the global leaders of Islamic finance due to its successful development of a complete Islamic financial system including Islamic banking, Islamic capital market and Islamic insurance.
iHarap will be a fintech business that will develop its technology platform to work with third-party financiers to provide ethical Islamic financing products via digital channels to end consumers.
New business to complement South East Asian BNPL rollout
Fatfish said establishing a new company based on Islamic financing principles is in line with the group’s plan to further develop its South East Asian fintech businesses.
“The Islamic financing business will be complementary to the BNPL services that Fatfish is rolling out, sharing common technology and back-office components and developing economy of scale at marketing differentiated financing products to the target audience in South East Asia,” Fatfish chief executive officer Kin-Wai Lau said.
iHarap’s operation will be funded from existing working capital of Fatfish.