Investree Syariah and the Rise of Islamic Tech

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Investree Syariah and the Rise of Islamic Tech

Ade Fauzan, Chief Operations Officer of Investree, has recently shared on the topic of Investree Syariah in their journalist class on 02/05/2019.

Investree Syariah, part of Investree which handles sharia-compliant offerings, shared their insights on Islamic Law or Sharia in the finance industry.

Three pillars of Sharia in the finance industry:

Riba or Interest is prohibited according to Sharia Law. 
One of the ways Islamic Tech and other financial Sharia institution provides a premium to loans is via Ijarah, or reward, instead of interest.

Gharar and Jahalah
Gharar means hidden consequences, while Jahalah is where there is a lack of knowledge. The combination of those two means that each contract or agreement under Sharia Law must be clear and precise, where both parties are well-informed of the content of the contract or agreement.

Maysir simply means gambling, and it is prohibited too according to Sharia. 

Now that we have briefly touched on what are the three main principles of Sharia Law, let us move onto our main topic.

The Rise of Islamic Tech in Indonesia

Sharia is on the rise today in Indonesia, as seen by the abundance of major Sharia Fintech such as Investree Syariah.
According to Ade, there are three reasons why Sharia is on the rise today.

The Rise of Islamic Values in the Society

The rise of Islamic values in Indonesia might not be as obvious as it sounds.
The graph below indicates the Google Trends of Riba in Indonesia for the past five (5) years and the trend is rising.

taken from

Although it is but one example, what we can say is that Indonesian are more receptive and aware of Islamic values.

According to Pew Research Center, the percentage of Muslim Indonesian stays consistent from 1990 at 87.2%, to a projected 88.0% in 2030.

Therefore, it is accurate to say that the values of Islam has risen while the proportion of Muslim remained relatively constant.

Digitalization and Internet Booming

This point has been repeated many times when talking about the rise of startups in Indonesia.

There is a sharp rise in digitalization, or the use of digital technology to change a business model and provide new revenue and opportunities.It is mostly due to the increase in mobile phone ownership, which is due to the increase in purchasing power of Indonesians in the recent years.

Most Islamic Tech uses mobile phones as their platform of choice, including Investree.

Therefore, more and more people each year have the access to said Islamic Tech.

Demographic Shifting

As stated previously, in average Indonesians have higher purchasing power as a result of increased gross domestic product (GDP).

This has opened up a new realm of opportunities that is previously unreachable to some Indonesians; entrepreneurship.

What entrepreneurs need foremost is capital, and here is where Islamic Tech such as Investree comes in.

Investree provides funding, even to the unbankable, to MSMEs in Indonesia as a way for them to run or start their businesses in a way that is approved under Sharia Law.

In the end, just as the largest Muslim country in the world, it makes sense for Islamic Tech to flourish here perhaps in the near future.

This is the second part of our series on Investree. 

For the first part regarding the utilization of new data in loan grading system, click here.

For the third part regarding 6 differences between fintech and bank lenders, click here.