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An app for halal investing is making it possible to purchase Starbucks with gold

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    (RNS) — When Aamir Hassan began working as a medical resident in a North Florida hospital in 2011, he made a bold financial choice: He opted out of the hospital’s retirement plan.

    It wasn’t because Hassan lacked financial savvy. As a devout Sunni Muslim, Hassan’s faith shapes every aspect of his life, including his investments.

    “The 403(b) would not accommodate investments of my choice. It would be hospital-determined,” Hassan explained to Religion News Service. “So during those 10 years, I decided to forego having any investment in the 403(b).”

    Hassan couldn’t ensure the funds would be invested in accordance with his faith, so he chose not to contribute to the plan at all. Though he knew the choice would cost him, he said, “everyone is different in terms of how strongly they may abide by their personal principles or values.”

    Today, Hassan is a hospital physician in Allentown, Pennsylvania, with a retirement account that’s considered halal, or permissible, according to Islamic faith. After discovering Islamic finance options in the mid-2010s, he eventually began using the app Wahed because of what he considered an easy-to-use digital interface.

    Launched in 2017 as a halal investment app, Wahed — which means “one” in Arabic — is one of a number of Islamic fintech (financial technology) companies that have sprung up in the last decade to cater to Muslim clients.

    Ghiyath Nakshbendi. Photo courtesy of American University

    Ghiyath Nakshbendi. Photo courtesy of American University

    Ghiyath Nakshbendi, a senior professorial lecturer at American University in Washington, D.C., and an Islamic finance expert, described Islamic finance as an alternative financial option that has been around since the birth of Islam. He boiled Islamic finance down to three main concepts: There’s no interest, it promotes community and it requires all parties in a financial transaction to share the potential risks and profits.

    Islamic finance promotes community flourishing, Nakshbendi told RNS, by barring investments in products considered harmful, such as tobacco, liquor or pornography. That’s where halal investing comes in.

    “If I can’t, for example, own a brick-and-mortar business that sells weapons or is a casino, I shouldn’t benefit from the returns of its company stock or equity,” explained Samim Abedi, Wahed’s chief investment officer. “So on the investment side, it’s making sure that the actual business practices and the revenues generated from the stocks you own are in line with your views.”

    “Riba,” an Arabic word roughly translated to mean the payment and collection of interest, is also prohibited for both lenders and investors under Islamic law, including banks. This has led to Islamic bank alternatives like the Islamic Bank of Britain, which offers workarounds instead of paying interest on savings accounts, checking accounts and mortgages.

    Of course, interpretations of these guidelines vary, and the principles of Islamic finance are extensive. That’s why groups like Wahed exist.

    “These halal firms that emerged in the 2010s, they navigate what’s permissible and what’s not by combining two separate bodies,” Hassan told RNS. “You have modern financial investors who happen to be Muslim, many of them, and then they work with religious clerics and Islamic scholars who are very knowledgeable in the financial branch of Islam.”

    Examples of investments that will not be made with Wahed. Screen grab

    Examples of investments that will not be made with Wahed. Screen grab

    At Wahed, a Shariah review board ensures the company’s investments, business practices and governance comply with Islamic law. By the time investments make their way into clients’ portfolios, they’ve already been reviewed at several junctures. This allows clients to focus on investment performance, rather than worrying about which sectors to invest in.

    “As a minority in a lot of Western nations, we’ve been consumers of whatever products have been out there, for better or for worse,” Abedi told RNS. “But fortunately, we’re in an advantageous position where we can start crafting proactively on our terms products that fit the mold of what we’re allowed to do.”

    That’s part of what enticed Abedi to leave a position at Google for Wahed in 2018, where he now serves clients “who look and sound like my own family,” as he put it. “There’s never been really a dedicated investment in this demographic en masse across borders.”

    Five years since its launch, Wahed now offers a menu of services to its more than 300,000 clients. Its halal investing features are available in places like the United Kingdom, Malaysia and the U.S., and last week the company launched a physical bank branch in Central London along with a debit card for U.K. users that’s linked to a gold-backed electronic money account. The debit card allows users to readily spend assets that don’t collect interest and aren’t lent out to other users the way money is in a conventional bank.

    A new Wahed physical bank branch in London. Photo courtesy of Wahed

    A new Wahed physical bank branch in London. Photo courtesy of Wahed

    Wahed also told RNS it is partnering with Synctera, a platform that builds, launches and enhances financial tech companies, to offer similar debit cards in the U.S. Though plans are still in the works, these debit cards, like the U.K. version, would allow clients to make purchases with non-interest-bearing assets (such as gold) held in electronic money accounts.

    “In the past, if you wanted to, you could buy gold and stick it in a safe or use a gold trust. The problem is how do you use that money?” said Peter Hazlehurst, co-founder and CEO of Synctera. “By doing what we’re doing, we’re actually facilitating the real time-ness of being able to spend your investment assets or your gold with your debit card so you can basically literally buy Starbucks coffee with a piece of gold.”

    Hazlehurst said that much as local banks build community based on geographic proximity — with branch managers sponsoring little league teams or having a booth at the town fair — fintech is building online communities by offering banking and investing services to niche and often underserved groups. “This is one of the great things Wahed is doing for the Islamic community,” he said.

    Samim Abedi. Photo courtesy of Wahed

    Samim Abedi. Photo courtesy of Wahed

    Though designed with Muslims in mind, Nakshbendi told RNS that Islamic finance is an option for anyone. He finds that students of all backgrounds in his Islamic finance classes appreciate the approach’s fairness and positive societal contributions. Abedi said Wahed is also an app for everyone and that its successful performance is already attracting a wide range of clients. “By catering to our community, we’re seeing it resonate with different other communities as well.”

    Importantly, just as not all Muslims prefer halal foods, not all Muslims choose Islamic banking or investing. Hassan noted there can be different approaches even within families: His brother, for instance, is happy with a Vanguard account. But, he added, the option should still be available for those who consider it a matter of faith.

    For Hassan, his Shariah-compliant investments have paid off. After over a decade of living in rentals, he recently withdrew from his personal account with Wahed to pay for a deposit on his family’s first home. “We are blessed,” he said.


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