The potentials of smart contract in Islamic trade finance

Abstract

This chapter examines technical innovations and financial technologies, particularly, the potentials of smart contract in reshaping Islamic trade finance. It explains modern Islamic trade finance practices with a focus on products, problems and prospects. The chapter focuses on smart contract and its current application in the finance industry. It presents the process of smart contract implementation in Islamic trade finance with a proposed model of new smart platform and relevant discussions on legal implications and Shari‘ah aspects of the model. The chapter provides a conclusion and some areas for further research and describes the gap by examining potentials of smart contract in Islamic trade finance as well as possible legal and Shari‘ah implications of the implementation. The ability to change and adopt new technologies will determine the future of Islamic finance generally, and in particular, Islamic trade finance. Smart contract’s potential for disruption of Islamic trade finance goes beyond simple digitisation of Islamic trade finance products and services.