Employing Takaful Islamic Banking through State of the Art Blockchain: A Case Study

Abstract

Takaful -an Islamic alternative to conventional insurance -is fast becoming one of the most important constituents of modern Islamic financial market. The fundamental difference between the two forms of risk mitigation is entrenched from the type of contract selected. The conventional insurance work on the principle of bilateral contracts between the customer (insured) and insurance provider where the insured pay regular premium in return for payment of compensation, in case of a predefined event occurs. On the other hand, Takaful works on the principle of mutual guarantee, cooperation and indemnity where the participants in the scheme mutually insure each other. The Takaful providers are mainly responsible for managing, administering and investigating the Takaful funds according to Islamic laws. This studies provides a decentralized architecture that securely implements Takaful risk mitigation system according to its principles. Since all major banking sectors are shifting towards Blockchain technology, as it is currently the only viable solution to offers security, transparency, integrity of resources and ensure trustworthiness among customers. The proposed studies offer state-of-the-art Blockchain technology and focus provide a Takaful system that strictly follows the underlying Islamic laws for this risk mitigation system. Moreover, the proposed platform provides all Takaful transactions over Blockchain that brings confidence and transparency to the community involved in the process.

Islamic Fintech Research: Systematic Review using Mainstream Databases

“…A mixed-method study, for example, was conducted by Bulatova et al (2019), analyzing numerical data statistically and combined with insights from the literature. For qualitative studies, the method used is a case study (Abdeen et al, 2019) or interview/focus group discussion (Hendratmi et al, 2019). Figure 3 illustrates our findings regarding the publication methods of the 21 papers being studied.…”

A Novel Blockchain-Based Framework for Vehicle Life Cycle Tracking: An End-to-End Solution

“…The buyers can evaluate various insurance models and purchase the one that is most suitable to their needs. However, the Takaful insurance model presented by [4] follows sharia laws in true letter and spirit and is a fully automated blockchain-based solution adopted and followed by the majority of the Muslim global markets. The Takaful is implemented in the Hyperledger Fabric, which has a network of servers for hosting Takaful insurance members and the Takaful administrators that record contribution from other members and further interconnecting them.…”

“…The SC which is interfaced with REACT RESTful API provides access to takaful packages. For takaful, a completely separate SC has been developed that interacts with the takaful system, which is out-of-the-scope of this paper but has been discussed in [4]. Similarly, every year regular inspection is performed that ensures the vehicle is in the condition to be driven on the road.…”

“…Blockchain is a distributed, tamper-proof ledger technology implemented with a decentralized consensus mechanism and is often autonomous [2]- [4]. The ledger is trusted by all participants as being a system without a central repository.…”

An Analysis of Strengths, Weaknesses, Opportunities, and Threats (SWOT) on the Use of Blockchain Technology in Islamic Banking in Indonesia

“…These features included transparency, trust, availability of resources, efficacy, availability and integrity of assets through general ledger. To apply transparency in the ledger, blockchain provided a public ledger that could not be tampered with (Abdeen et al, 2019).…”