Islamic Finance

Wahed Invest readies UK app as it eyes geographic expansion, long-term goal of Islamic digital bank


LONDON - Wahed Invest, a U.S.-based online Islamic investment platform, is preparing its mobile application for the United Kingdom following a legal status change with the regulator.

In late January, Wahed obtained permissions from the UK regulator, the Financial Conduct Authority (FCA) to act as a Discretionary Fund Manager. This means the company is no longer required to be an appointed representative of WealthKernel that currently provides execution services for Wahed Invest’s clients.

The regulatory status allows Wahed to launch its proprietary app. The UK app will be ready later this year on both iOS and Android, Aris Parviz, Head of North American Operations, told Salaam Gateway.

“[Thus far] Wahed UK was solely a website experience, and due to regulatory constraints we could not launch our app,” said Parviz. 

The status change also means a strong relationship with the UK regulator and third parties. “Having our own licenses allows us to directly integrate with third party applications in order to make the Wahed app and process significantly smoother,” Parviz said.

MANAGING THROUGH COVID

Wahed has managed well despite the current investment climate and environment amid the COVID-19 pandemic, according to Parviz.

“As we invest into companies that are not heavily geared and don't rely on loans as a revenue generator, we tend to fare better during volatile market periods,” he said. “This can be seen historically across most major Islamic equities indices.” 

“Most Wahed clients opt for a fully diversified portfolio, thus hedging their exposure to certain risky asset classes with safer countercyclical ones,” said Parviz. “Gold, for example, has fared our clients very well during this crisis.”

Without providing specific numbers, he also noted that assets under management have performed well during the pandemic.

“We have maintained positive inflows throughout the COVID pandemic,” Parviz noted. “In fact, this April saw a record week in AUM increase for Wahed.”

To manage conflicts of interest Wahed has an independent investment committee that selects funds and securities purely based on objective, safety, performance and fee-related data.

“We are happy to use third-party funds, and even competitors’ funds, in cases where they are most efficient,” said Parviz.

NEW GEOGRAPHIES

As its number of clients reaches 100,000 globally, Wahed plans to further expand its geographic presence.

“We have licences in 9 jurisdictions and currently operate in Malaysia, USA and the UK,” said Parviz. “We aim to launch in all pending 6 countries one after the other as and when we are able.”

Among the territories the company plans to enter in the future are Kazakhstan, the EU and Indonesia.

“We are prioritising large markets where rural and mass retail market people do not have access to Islamic investments,” Parviz added.

LEAN MARKETING STRATEGY

Wahed’s unprecedented growth has been completely organic this year, meaning that it has spent $0 on any paid ads, campaigns or other marketing exercises, according to Parviz.

Instead, the only marketing method used is customer referrals, which at times are incentivised with a referral bonus.

“We believe that our client base are our biggest promoters and have seen the effects of this first hand. Wahed Malaysia, for example, has crossed 50,000 clients solely on client referrals,” said Parviz.

“Thus, our CAC (cost of acquiring customer) is not comparable to the RoboAdvisor industry at large and would be a small fraction of the average industry CAC expense, if compared.”

LONG-TERM: DIGITAL BANK

Wahed’s long term plans include widening its asset universe alongside AUM growth.

“The Islamic market is in dire need for efficient products and we plan to provide these as soon as sustainably possible,” said Parviz.

As well as expanding the universe and AUM, Wahed plans to offer more services beyond robo-advisory.

“Our plan has always been the same from Day 1: We plan on expanding globally with our robo proposition, listing further funds on the Nasdaq and London Stock Exchange, offering a range of takaful products before creating the first truly Islamic digital banking institution.”

This bank would be deposit-taking and transitionary, and not a lending institution as Wahed has no plans to provide loans in the future, Islamic or otherwise, according to Parviz.

“It is a long-term objective and not in the near-term,” he said. “It would be multi-jurisdiction to create a global player as is our mandate. We have started the legal and infrastructure work. We have already developed the tech and application.”

Despite the growing prominence of ESG, Parviz said that Wahed is not looking at ESG activities at the moment.

“We would like to focus on usury and income inequality as a primary aim,” he said. “Once our global vision is fulfilled we may look into other ethical goals.”

STEADY SCALABILITY

Looking ahead, Wahed will continue to scale, however, it has taken a more organic and sustainable approach to growth in order to avoid risk and volatility faced by other fintech players, notes Parviz.

“We do not want to be dependent on market cycles and believe our unit economics are good enough to grow in a sustainable and mature manner.”

(Reporting by Hassan Jivraj; Editing by Emmy Abdul Alim emmy.abdulalim@salaamgateway.com)

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Hassan Jivraj