Project Overview
A UK FCA-authorised Islamic bank wanting to expand digital channels needed a bespoke Islamic banking platform ...
Technology Stack
Compliance & Standards
The Challenge
A UK FCA-authorised Islamic bank wanting to expand digital channels needed a bespoke Islamic banking platform — providing Sharia-compliant current accounts (Qard Hasan), home finance (Diminishing Musharakah — shared ownership mortgage), and trade finance (Murabaha — cost-plus financing). FCA authorisation as a deposit-taking institution (Prudential Regulation Authority oversight), FCA Consumer Duty, Sharia Supervisory Board (SSB) compliance documentation, UK GDPR, and UKFIN (UK Islamic Finance Index) reporting were the requirements. Budget: £140,000.
Our Approach
Diminishing Musharakah home finance
- bank and customer jointly purchase property (e.g., 80% bank / 20% customer), customer pays rent on bank's share and gradually purchases bank's share over term.
- No interest charged — rent income, not interest.
Platform
ownership register (current shares per party), rent calculation (bank's share × market rent rate), and monthly acquisition (customer buys additional share).
FCA regulated
Diminishing Musharakah is a regulated home purchase plan (FCA HPP rules — COBS 4 and MCOB equivalent).
SSB review
all new products and significant changes require SSB approval (fatwa — religious opinion).
SSB workflow
product change request → SSB document package (contract terms, commercial terms, Sharia compliance analysis) → SSB meeting → fatwa issued or revision requested → product launched.
Audit trail
every SSB interaction logged with outcome — FCA expects documented Sharia governance for Islamic banks.
SSB composition
- minimum 3 Islamic scholars with qualifications in Islamic finance jurisprudence.
- FCA Deposit-
PRA Prudential Regulation
- UK Islamic banks are regulated by both FCA (conduct) and PRA (prudential).
- Capital adequacy (CRD V / Basel III): Islamic bank capital requirements under UK Islamic Finance Regime (FCA CP22/28).
Liquidity
Islamic bank cannot hold interest-bearing liquid assets — FCA-approved Sharia-compliant liquidity instruments (UK government Sukuk).
Platform
regulatory capital dashboard (CET1 ratio, leverage ratio), liquidity coverage ratio (LCR), and PRA automated reporting (COREP/FINREP via PRA Connect API).
Islamic banking customer data
- faith data (Muslim identity implicit from product choice) may be Article 9 special category (religious belief).
- UK GDPR Article 9(2)(a) explicit consent basis for faith-related data processing.
Privacy by design
platform avoids recording religious belief as an explicit data field — customer product choice is a business record, not a religious belief record.
ICO guidance
faith-based bank processing faith-implicit data — consultation with ICO Data Protection Officer recommended before launch.
The Results
FCA and PRA authorisation confirmed.
Platform live at 22 weeks, £128,000 — under budget.
Digital account opening: 2,400 accounts in first 6 months.
Diminishing Musharakah home finance applications: 340 in first 6 months.
SSB governance workflow: 100% documentation compliance (zero SSB-unapproved products launched).
PRA regulatory reporting: automated — previously 2 weeks per quarter manual.
FCA Consumer Duty review: confirmed compliant.
UKFIN Islamic Finance market share: platform featured as digital innovation case study.
“2,400 digital accounts and 340 home finance applications in 6 months. The SSB governance workflow means zero non-Sharia-compliant products have been launched — that is the bedrock of customer trust in Islamic finance. PRA reporting automated — 2 weeks per quarter returned to the team. Featured as a UKFIN digital innovation case study." — CEO, UK Islamic Bank (name withheld)”
Project Details
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