AI-based, ethical Islamic finance hub Yadeam promotes sustainable, inclusive, and socially responsible investing for all

In a time when financial inclusivity and sustainability have become paramount, fintech services need to meet standards rooted in ethics and transparency. Traditionally, financial services do not promote ethical investments, and the industry has little to no transparency. Although the trend towards socially responsible investing is growing, this sector is still new, and choices are limited – especially for faith-based investors in the Muslim community. In addition, currently available solutions do not use recent advances in technology such as AI and machine learning. Yadeam is an AI-powered investment platform on a mission to advance principle-based finance (PBF) principles for a more equitable economy and to drive social impact by innovating. The company leverages cutting-edge technology to revolutionise the Islamic and ethical finance sector, drawing inspiration from advanced digital infrastructure and solutions such as those developed by leading fintech firms. 

The history of Islamic finance in the United Kingdom 

The UK is the leading Western centre for Islamic finance outside the Middle East, holding 85% of Europe’s Islamic finance assets [1]. Institutions in London and other cities in the UK have been providing Islamic financial and related professional services for over 40 years [2]. Islamic finance reached the UK in the 1980s, and by 2012, the UK was ranked the 9th largest country by compliant assets, with more than 20 institutions offering Islamic finance [2]. In 2014, the UK was the first Western country to issue a sovereign Sukuk or an Islamic bond [3]. A sukuk is an Islamic financial certificate, similar to a bond in Western finance, that complies with Islamic religious law, commonly known as Sharia [4]. Notably, the Bank of England has also recognised the role of Islamic finance in supporting post-Covid economic recovery through risk sharing, pro-ESG investing and innovation [5]. 

Industry overview and challenges 

Conventional financial systems expose borrowers to disproportionate risks, especially in economic downturns. Practices like high loan-to-value ratios increase borrower risk. In addition, current monetary systems are characterised by financial exclusion and impersonal services.  

The global Islamic finance market was valued at $2.8tn in 2022 and is expected to reach $4.5tn by 2030, growing at a CAGR of 11.4% from 2023 to 2030 [6]. The sector’s growth is driven by the increasing demand for Sharia-compliant financial products and services from Muslim consumers, rising awareness about the benefits of Islamic finance, and growing government support for the development of the Islamic finance sector.  

While the industry has seen significant growth in the UK, particularly within recent years, it is still a maturing sector, with the demand for ethical or Islamic finance far exceeding the supply [7]. This demand for Islamic finance stems from a new generation of ethically minded investors rather than just those from the Islamic faith. In 2018, Al-Rayan Bank reported that approximately 33% of their customers were non-Muslim, compared to 12% in 2010 [8].  

The core principles of Islamic financing also align with the United Nations sustainable development goals (SDGs) [9]. In addition, financial institutions have been increasingly adopting AI-driven solutions for personalisation [10]. While Islamic finance has a broad appeal, there is still a scarcity of platforms serving both Muslim and non-Muslim customers. Islamic finance platforms should embrace advanced technology more quickly to keep up with conventional finance solutions [11]. This is particularly significant for an already underserved community that is at risk of financial exclusion. 

Despite the emergence of crowdfunding platforms, existing solutions offer only equity crowdfunding, according to Yadeam. The company claims that there are no Islamic finance platforms for reward crowdfunding, whereby businesses can raise funds without giving away equity. 

As an emerging fintech company, Yadeam plans to make an impact on the global financial sector by innovating, inspiring, and influencing revolutionary services that align with Islamic principles, meeting the needs of ethically minded consumers and businesses, and leveraging the power of AI.  

Yadeam – revolutionising finance for good  

Yadeam is targeting both Muslim and non-Muslim customers who are interested in principle-based finance. The company aims to be the UK’s first reward crowdfunding platform within the Islamic and ethical finance industry before adopting a hybrid model, allowing equity investors in the future. It aims to be the first in this sector to leverage AI capabilities. 

 The company aims to increase access and transparency around ethical funds. It believes investing should not compromise one’s beliefs or collective wellbeing and that an approach aligned with Islamic finance principles can help drive systemic change. 

Yadeam plans to spread awareness of Islamic and ethical financing, inspiring customers and businesses to align their financial services with ethical and sustainable values. It also aims to be a trailblazer for the broader industry in pursuit of a more equal, ethical and equitable future.  

How Yadeam works 

Yadeam intends to leverage AI technology to provide tailored insights based on customer preferences and risk tolerances, ultimately enhancing the customer experience. According to the company, investments will be democratised, empowering those who wish to align themselves with ethical investing.  

The company initially plans to offer a reward crowdfunding platform. Through this platform, businesses can secure financing without giving away equity to investors. According to the company, the platform has the potential to allow investors to receive products or services for free or at a discounted rate, often on an early-access basis. Through this exchange, businesses using the Yadeam crowdfunding platform will have the opportunity to receive product feedback before launching into the market.  

In its second phase, the company intends to use the launch as a foundation to introduce its hybrid platform as a “For Good” initiative offering investors equity options.  

Yadeam is developing its proprietary technology to provide customers with automated investment screening, risk profiling and portfolio customisation to ensure that investments align with values that foster community good. 

Yadeam’s operational framework and technology stack — built on Amazon Web Services (AWS) —are designed to deliver a seamless, efficient, and ethical investment experience. According to the company, at the core of its technology stack is its proprietary AI engine, which leverages machine learning algorithms to analyse and select investments that are compliant with Islamic finance principles. This engine uses natural language processing (NLP) to interpret Sharia guidelines and adapt portfolio allocations accordingly.  

Yadeam intends to incorporate blockchain technology to facilitate secure and transparent transactions and ensure that all financial activities are recorded in an immutable ledger. In addition, the company reports that its platform will be hosted on scalable cloud infrastructure, ensuring reliability and the ability to scale operations efficiently as its user base grows.   

According to Yadeam, its user interface will be accessible through both web and mobile applications and designed for ease of use and accessibility to provide a seamless user experience. These applications will allow users to manage their portfolios, view their investment growth, and access educational resources on Islamic finance. 

Yadeam’s revenue model is multifaceted, incorporating subscription fees, transaction charges, and consultancy services. Offering tiered subscription models may cater to varying investment needs and preferences, enhancing accessibility for all users. 

The next steps 

Yadeam has chosen to use Floww’s innovative infrastructure to facilitate its initial funding round and help it achieve its future goals. In Q3 2024, Yadeam will officially launch its platform to the market, targeting early adopters within the Islamic finance community for initial growth.

After launching its AI-powered crowdfunding platform in the UK, Yadeam has ambitions to scale and expand globally. In particular, the company aims to initially target Gulf economies such as Qatar, working with established organisations in the region, as it plans to take advantage of its vibrant and nascent tech startup ecosystem.

The company’s short-term business strategy includes collaborating with Delio Ltd on a customisable digital infrastructure. This will involve working with Delio for deal distribution and management and achieving FCA compliance. Yadeam plans to onboard individuals with FCA qualifications and pursue the goal of becoming an FCA-regulated corporation before the launch of its equity crowdfunding.

*Floww Markets Limited is a company authorised and regulated by the Financial Conduct Authority (FCA). Firm reference number 980098.

The information and imagery contained within this article does not represent the opinions of Floww. Floww does not have a view on opinions provided by Yadeam Ltd in this article and elsewhere where they may be expressed, and is not responsible or liable for the information within this article.