A fintech application for participation finance: Crowdfunding business model proposal

Emerge from the infaq spirit of Islam, zakat, sadaqah and qard al-hasan are some of the most significant institutions which reflect the principles of the system of participation finance such as social assistance and solidarity, the spirit of fraternity, and the fair distribution of wealth. Though participation finance made successful initiatives in many areas, these institutions failed to find as big of a field of application in the participation finance system as other financial instruments. The main reasons for this are the non-instrumentalization and non-institutionalization of zakat, sadaqah and qard al-hasan, the lack of transparency, and the fact that traditional methods are still in use in the activities of these institutions. Crowdfunding can be an effective method in the solution of these problems. Crowdfunding is an alternative way to access financing through digital technologies. With adjustments suitable to the structure of participation finance, zakat, sadaqah and qard al-hasan, can be integrated into the crowdfunding system. These adjustments could provide an opportunity to expand the scope of these institutions and make financial products more practical through integration with technology. This study aims to benefit from the innovations in fintech and help instrumentalize and institutionalize zakat, sadaqah, and qard al-hasan to create a crowdfunding platform. In line with this aim, we have developed a web-based crowdfunding platform prototype (Kitle Katılım) that enables the collection and distribution of funds through zakat, sadaqah, qard al-hasan. The Kitle Katılım platform (kitlekatilim.com) that we have created will facilitate the collection of funds through zakat, sadaqah, qard al-hasan in a more transparent environment. Thus, these institutions will be able to increase their potential success in participation finance.