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Aramco-backed fintech opens bank branch in London to help Muslim investors

Wahed, a New York-based company that specializes in halal investing, has opened a branch in the United Kingdom. The company is targeting the UK's 3.9 million Muslims with a sharia-compliant investment management and advice service.‍ The new retail location has a sleek, modern design similar to an Apple store. Inside, there are digital displays and a bright sign outside displaying the company's logo. The store is located on Baker Street in central London, just opposite a branch of U.K. banking giant HSBC.‍

January 24, 2023
6 minutes
minute read

An investing platform that counts Saudi Aramco and French soccer player Paul Pogba among its backers is launching a new proposition in the U.K.: a physical branch and bank accounts backed by gold.


Wahed
, a New York-based company that specializes in halal investing, has opened a branch in the United Kingdom. The company is targeting the UK's 3.9 million Muslims with a sharia-compliant investment management and advice service.


The new retail location has a sleek, modern design similar to an Apple store. Inside, there are digital displays and a bright sign outside displaying the company's logo. The store is located on Baker Street in central London, just opposite a branch of U.K. banking giant HSBC.


Khabib Nurmagomedov, a Russian former professional mixed martial artist, is a promoter of the firm and will be attending the branch opening on Tuesday.
Wahed is also introducing a debit card that allows users to deposit funds with an exchange-traded commodity that tracks the price of gold, meaning they can effectively pay for everyday goods using gold.


Investors will be able to redeem the gold in their accounts for physical bars. This will allow Muslim and non-Muslim consumers to protect themselves from currency fluctuations and the rising cost of living. Wahedna told CNBC that Muslims are an underserved community when it comes to finance. He said that there is a lack of financial literacy among Muslims, which presents a market opportunity for digital Islamic finance.


Banking startups such as Monzo and Revolut have flourished in the U.K. by offering smartphone apps that help users manage all their finances. However, Wahedna cautioned that this risks leaving behind Muslim consumers who do not have access to physical bank branches. "The Muslim community in the United Kingdom is actually one of the lowest socio-economic segments of the country," Wahed's boss said. "Many Muslims have low incomes or lack financial literacy."


"They have trust issues,"
he added. "So they want to see a physical presence before they trust you with money."
Wahed's service is designed to help clients comply with the strict financial requirements of the Islamic faith. Sharia law prohibits charging or earning interest on loans, or investing in companies that generate a significant portion of their revenue from the sale of alcohol or gambling.


Wahed does not allow investments in companies that profit from lending, gambling, alcohol, or tobacco. Additionally, Wahed does not offer interest on savings, nor does it promise high returns on risky crypto tokens. Instead, the value of users' deposits is based on the value of gold, which fluctuates depending on supply and demand.
Wahedna believes that the Islamic banking system is a good fit for the needs of the Muslim community. Without a proper banking system in place, many Muslims keep their money in cash, which is often unsafe and can lead to loss every few years due to scams or other exploitation. This creates a cycle of poverty that is difficult to break.


Junaid slammed the state of modern fintech companies, suggesting that the industry is too focused on consumer lending with the rise of Klarna and other hyped "buy now, pay later" services. He believes that this focus is preventing the industry from developing other important financial technologies that could have a major impact on the economy.


"Wahedna pointed out that all of their business plans are built around lending revenue. Even digital banks, he said, are focused on eventually getting a banking license."

He said that Wahed is focused on making money by charging wealth management fees. This fee is a percentage of the user's overall asset holdings. The startup, which was founded in 2017, is not yet profitable, but has hit operating breakeven in Malaysia and the U.S.
Wahedna believes that fintech, like most of the finance industry, is too focused on lending. This, in turn, is making the cost of living crisis worse, as more and more people are taking on debt just to get by.


"Buy now, pay later companies are causing people to struggle," he said. "That's the worst type of innovation. You're making it easier for people to get into debt."
Wahedna stated that the company is not only for Muslims and that it aims to serve followers of other Abrahamic faiths as well, including Judaism and Christianity.
The London branch of the company will offer assistance to customers with opening accounts, making investments, and planning their wills and estates.
Wahedna said that the firm is targeting both high-net-worth individuals and less well-off consumers.


Wahed has raised a total of $75 million in funding to date from investors including Saudi Aramco Entrepreneurship Capital and French footballer Paul Pogba. Both Saudi Aramco and Pogba are practicing Muslims.


Islamic finance has seen significant growth over the past decade and is expected to reach $4.9 trillion in value by 2025, according to Refinitiv’s Islamic Finance Development Indicator. A number of other fintech players are seeking to tap into the halal money space, including Zoya and Niyah.

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