Awqaf in the Fintech Age
By Dr. Hisham Dafterdar
This is an era where technological change is happening faster than ever. The speed at which high-tech development is taking place has given rise to very unnerving disruptive changes. The digital world is just too complex and convoluted. We are driven by things we can’t touch and things we can’t control. We are also worried about invasion of our privacy and manipulation of our personal information. Digital applications are so pervasively integrated into our daily life that we use them without questioning whether they are ethical or trustworthy.
This is also an era in which public confidence in awqaf is at a fairly low level. There is a virtual “Chinese Wall” between awqaf and their stakeholders. Stakeholders want to know much more about how awqaf are managed, how and how much money is received, what it’s being spent on and how it’s helping the beneficiaries and improving their lives. Blind spots can be found in many areas such as oversight and decision making, impact and effectiveness, relationships and some other domains.
The digital world is on awqaf’s doorstep and the pressure is on nazirs to respond. The good news is that nazirs want to keep apace with technological advances and integrate technology into their organisational strategy. The bad news is that awqaf are not wired as digital organisations and the way they are managed is still a look back at historical practices. The awqaf sector is not known for being open to change and is loath to change its time-honoured methods. Whereas companies use technology to improve their profit margins, increase market share and enhance shareholder value, awqaf have different needs and require a different calculus. They are not as concerned about profitability and growth the way companies are. Awqaf are focused on their mission – feeding the hungry, sheltering the homeless, helping the disabled, and building stronger communities.
The digital journey has begun and awqaf should take steps to harness the influx of technology they are witnessing. Digital transformation necessitates the re-alignment of awqaf’s legal and administrative processes with modern technological advances. Emerging technologies such as blockchain and distributed ledger technology (DLT) are lauded as being immutable and indisputable. As such they provide a secure and transparent record of awqaf properties and investments. Rather than manually preparing and allocating beneficiaries’ entitlements, a software program could do the job. Artificial intelligence (AI), machine learning, robotic process automation (RPA), and other technological advances, are practical means that help the nazir to become a strategist and not just a steward.
In the fintech world, the human element is eliminated. Awqaf, like all sectors will be impacted by automation, machine learning, and artificial intelligence (AI). But none of this is a replacement of the human nazir. The people aspects will always be more important than the technology. In fact as we enter an age where artificial intelligence and automation is commonplace, the relationship between the nazir and the stakeholders becomes more important. There are many areas where personal interaction of the nazir is needed. Nazirs are cognizant of the beneficiaries’ needs and can reach to the grassroots of social problems. Simply put, technology will not replace the human conscience, but could take over much of the routine work which will enable nazirs to devote more time to visit and talk with their stakeholders. Technology is important, but if it’s not human-centric, it will not be of much use for awqaf.
Fintech is reaching notable benchmarks in terms of innovative applications. Awqaf need to figure out how this technology can be applied to improve operational efficiency, mission impact and community engagement. Fintech transforms work processes and capabilities and helps nazirs to better meet their KPIs and communicate actionable insights to their stakeholders efficiently and clearly. However, the new digital trends are posing challenges, potential risks, regulatory changes and Shariah implications. There are threats on which awqaf need to focus to ensure their assets, investments and beneficiaries’ data remain safe and private when putting together a cyber-strategy.
The rise of fintech will change the way we view awqaf management. Almost all sectors have been affected by the new technology and awqaf should not expect to be immune from disruption. Fintech will change the way awqaf are managed and nazirs will be challenged to reshape their role as they plan and discharge their responsibility. Awqaf having successfully survived and thrived throughout the ages, should get on the technology bandwagon to secure its space in the fintech age.
By Dr. Hisham Dafterdar
CEO, Awqaf Australia