After receiving an accreditation from the Shariyah Review Bureau for both its blockchain platform and its corresponding digital currency, all was set for Stellar Lumens to start operations in the Islamic Financial Industry. The aforementioned bureau is an Islamic advisory company that is located in Bahrain. However, Stellar Lumens will have to fend off competitions from Ripple after the firm announced that the National Commercial Bank of Saudi Arabia (AlAhli Bank) is now a member of Ripplenet.
The AlAhli Bank is one of the most significant banking institutions in the Islamic financial sector. As of now, the Saudi-based bank is the second largest bank in terms of assets in the Arab world and its services include Islam banking. Besides, this banks owns the majority stake in NCB capital, its investment subsidiary, also located in Saudi Arabia, as well as the largest participation bank in Turkey, TFKB.
Over the past decade, only a few countries can match the volume of remittances recorded in the Kingdom of Saudi Arabia. As per the World Bank, the country received a whopping $308 million worth of remittance and sent $37 million in 2016. Also, the market is made up of a mixture of 10 million locals and expats, and is expected to grow even further when the SME sector is factored in.
The National Commercial Bank’s decision to join Ripplenet was influenced by the recently concluded pilot project between Ripple and the Saudi Arabian Monetary Authority. Through Ripplenet, the bank will connect to other banking institutions worldwide. Initially, the networking program will reach out to banks in North America and Asia, starting with Singapore. As a result, NCB’s customer base, made of over 5 million individuals, will have access to services that were hitherto inaccessible.
Competition From Ripple
Earlier this year, the Stellar open-source exchange protocol received a certification for its blockchain network and its digital currency (XLM) from the Shariyah Review Bureau. The process, however, was not straightforward and took almost a year of negotiations to arrive at. The motivation for this was the eagerness to capitalize on the Middle East’s remittance market. Concerning this, Lisa Nestor, the company’s director of partnership, said that Stellar has been searching for institutions that facilitate remittances in the Middle East due to the market’s enormous potential.
Before Ripple made their announcement, Stellar was assured of a dominance over the Islamic financial world. Now that Ripple has joined forces with a prominent institution (AlAhli Bank), Stellar will have to up the ante to remain relevant in the Islamic financial sector. Form a consumer’s perspective, the competition between the two companies will result in a vast improvement in service delivery.