By Anna Irrera
LONDON (Reuters) -Wahed Inc, a U.S.-based Islamic-finance fintech startup backed by Saudi Aramco, will acquire Niyah Ltd, a British company that runs a digital banking app designed for the Muslim community, the companies said on Thursday.
Wahed hopes the acquisition will enable it to broaden its offering and eventually become a one-stop-shop for Islamic law-compliant digital financial products and services, it said.
The financial terms of the deal were not disclosed.
Launched in 2017, Wahed runs an online investment management platform in the United States which ensures its portfolio does not include investments in companies in restricted sectors such as gambling, firearms and alcohol.
The deal will allow Wahed to provide its customer base with more interest-free financial products, such as digital bank accounts and debit cards in the UK and elsewhere globally, it said.
It comes as more tech-savvy startups seek to tap the growing demand for financial products and services aimed at the Muslim community, and follows a $25 million investment in Wahed led by Saudi Aramco Entrepreneurship Ventures, the oil conglomerate's venture capital arm.
Islamic law, known as Shariah, strictly prohibits charging interest. To make digital banking Shariah-compliant, Wahed will allow customers to keep minimum amounts of their funds in cash so that deposits are not used for lending, and invest the rest, Junaid Wahedna, the company's CEO said in an interview.
"All the money you keep with us will be invested according to your preference, " Wahedna said.
The company, which has more than 100,000 customers, also plans to tap into growing demand for ethical financial products from a wider customer base, beyond just the Muslim community.
"There is no reason why we should not broaden out the scope of our reach to everyone," Wahedna said.
(Reporting by Anna Irrera; Editing by Kirsten Donovan)