The regulatory technology “RegTech” and money laundering prevention in Islamic and conventional banking industry

Abstract

This study aims to illustrate the impact of adopting Regulatory technology (RegTech) innovations in banks on money laundering prevention effectiveness using Bahrain as a case study. Bahrain has strived to position itself as the banking center of the Arabian Gulf, hence the results of this novel research are informative of the practices in the region. The primary data for this study was collected through a survey instrument distributed to 100 bankers working in Bahrain with expertise in compliance. The results of multivariate analysis indicate that transactions monitoring through RegTech and cost- and time-saving aspects of RegTech, drive money laundering prevention effectiveness to a highly statistically significant extent. However, electronic know your customer (KYC) technologies are insignificant as drivers. This research not only sheds light on the efficacy of RegTech but also raises general awareness concerning the adoption and integration of RegTech platforms for fighting money laundering. In particular, the findings provide specific insights about the deployment of RegTech capabilities in banks in regional banking centers of modest scale.

Factors Affecting Customer Adoption of Islamic Banking Services: A Case From Pakistan

“…Customers' desire for AIB services may be influenced by their awareness of services (Turki et al, 2020;Balushi et al, 2018;Lassoued et al. 2018).…”

“…Customer values, as well as the service's compliance with religious and societal values, might affect the decision to utilize Islamic banking services. (Turki et al, 2020). Previous research has indicated that customer AIB services are positively linked with compatibility (Ashraf et al, 2016;Lassoued et al, 2018).…”

“…Consumer intention to espouse the services of Islamic banking has been assessed in previous research using Roger diffusion innovation theory in variety of countries (Balushi et al, 2018;Hassan & Aliyu, 2018;Ibrahim & Rizvi, 2018). Multiple research on AIB has demonstrated that marketing communication during dissemination phase is crucial to success of an invention, according to Roger's diffusion innovation theory (Turki et al, 2020). Pakistan has a majority of Muslim population, but fewer Islamic banks than regular banks.…”

“…However, Islamic banks are strictly prohibited to engage in the interest-based activities like (RIBA). Moreover, Islam also discourages engaging finance in speculative business activities (GHARAR), or these businesses that are Haram in Islam (Turki, Hamdan, Cummings, Sarea & Anasweh, 2020;. The Islam specifically outlaws the use of interest, as revealed in Surah Nisa and Surah Rehman of the Holy Quran (Alalwan, Dwivedi, Rana & Algharabat, 2018).…”

“…The people consider other factors when deciding whether or not to use Islamic banking. Each of these factors can be branded into three categories: individual, social and cultural (Turki et al, 2020), and institutional (facilities) (Hidayah, Lowe & Woods, 2019). In addition, the existing literature identifies the factors like bank's reputation and convenience as well as its staff's skill level and the availability of ATMs (Hidayah et al, 2019;Alexakis, Izzeldin, Johnes & Pappas, 2019).…”