Digital commerce is set reach $4.6 trillion

In the backdrop of rapidly growing e-commerce for goods and services through internet and mobile applications, the digital commerce sales globally is projected to reach $4.6 trillion by 2022.

“The global banking and financial landscape have evolved radically over the last few years. These changes have been driven by impactful forces including regulatory changes, digitalisation and technological innovations,” Godwin Emefiele, Governor of the Central Bank of Nigeria, said in his address at the 26th World Islamic Banking Conference (WIBC) 2019.

“While traditional banking institutions will remain relevant in mobilising deposits, providing credits, and processing transactions, the conduct of financial services will continue to change drastically, reflecting major shifts in consumer expectations. Conventional banking with its rising cost of operations may be replaced by faster and more convenient financial gateways."

The 26th edition of the WIBC was opened by His Royal Highness Prime Minister’s Advisor His Highness Shaikh Salman bin Khalifa Al Khalifa in presence of Rasheed Al Maraj, Central Bank of Bahrain Governor, dignitaries, industry leaders, bankers, policy makers and 1300 delegates.

Held under the patronage of HRH Prince Khalifa Bin Salman Al Khalifa, the Prime Minister of the Kingdom of Bahrain, the WIBC is the largest and most prestigious gathering of Islamic banking and finance leaders in the world.

“As policymakers, we need to understand the emerging innovations that are most relevant to the evolving financial services industry. We also need to diagnose how innovations impact the ways in which financial services, particularly Islamic banking services, evolve over the long run. Thereafter, we need to determine the most optimal response of financial institutions and policymakers to these changes,” Emefiele said.

“The strongest shapers of the changing trends in the financial services industry today are the actions of public authorities, particularly in relation to regulation and supervision. Regulatory pressures arising from the 2008 – 2009 financial crisis increased the cost of capital, prompted large-scale divestment, and reshaped attitudes towards risk. Stability became a paramount concern for regulators, along with the development of proper risk management control systems.”

According to Dr. Sami Al Suwailem, Head of Financial Product Development Centre, Islamic Research and Training Institute, Islamic Development Bank, many analysts expect the crisis to take place in 2020.

"The exact timing is not what matters most. What matters is 'Why' and 'How'. Why would there be another major crisis, and how can it be avoided. Experts unanimously agree: It is because of excessive debt. Low interest rates since the onset of the Global Financial Crisis in 2008 made it unusually easy for corporates and sovereigns to pile up debt,” he said in his keynote address.

“The main question now is: How can we curb the growth of debt so that we can achieve sustainable stability? It must be clear from the beginning that stability is a public good. This means that, while the economy as a whole is better off in a low leverage environment, each market player has an incentive to deviate and add up leverage. But if everyone does the same, the economy stagnates and becomes susceptible to financial turmoil. It is a standard “fallacy of composition” problem. This means that curbing debt must be a collective endeavor. This is why the Basel Committee had to issue a new set of standards to make the banking sector more robust and resilient. To move from a high-debt to a low-debt environment requires a set of policies and regulations that encourage risk-sharing and participatory financing."