COCOA: Ethical investing for the global population

The market for ethical digital financial solutions, in particular those that align with Islamic Sharia law, is vast. Indeed, 99% of global financial services do not align with Sharia laws [1] – the ethical guidelines that govern a populace of over 2 billion Muslims worldwide [2]. As such, over 25% of the world’s population, with a median age of 24, have a significant unmet need [3]. They are unable to save, invest or buy a mortgage, resulting in major financial challenges.  

Ethical investing encompasses various strategies where investors make choices based on ethical principles, such as religious or social values, while also considering financial returns. It includes variations such as ESG investing. Islamic-compliant investments adhere to Sharia guidelines. Derived from Islamic religious law, investment in certain industries like alcohol, gambling, and pork is prohibited, based on Quran and Hadith scriptures [4].  

Islamic finance, as an investment strategy, offers Muslims a way to manage their finances in line with Islamic moral principles. It covers savings, investments, and home financing, with earnings generated through profit-sharing and financial instruments backed by tangible assets [5]. This system strictly prohibits transactions involving interest (riba) and emphasises transparency, requiring transparency and certain terms in contracts to adhere to Sharia compliance [6]. 

What will COCOA do? 

COCOA believe they are among the handful of companies globally that have designed, developed, and previously deployed a fully operational fintech platform that adheres to Sharia principles. This entirely digital platform is designed for affordability and accessibility, with the plan to offer investment options starting at just £100. It will grant both Muslims and like-minded investors access to ethical financial services in line with their principles. 

The company’s mobile-first platform will provide a diverse audience access to COCOA’s Sharia-compliant financial opportunities, which also align with the UN Sustainable Development Goals, demonstrating their inclusive appeal beyond just Muslim investors. The platform will be capable to support diverse investment portfolios encompassing equities, commodities, and fixed income sukuks. Notably, their portfolios have been designed in conjunction with global asset management company, BlackRock. Cocoa believes these options will address the ethical requirements of the Muslim community while providing a wide range of choices to optimise their financial returns.  

Who will COCOA help? 

The primary market for COCOA is the global population of 2 billion Muslims and a broader ethical finance audience. The Islamic finance industry, valued at $2.2 trillion in 2021 according to Reuters [7], is one of the fastest-growing sectors and is projected to reach $5 trillion by 2025 [8]. It has emerged as an effective tool for global development, even in non-Muslim countries, with the potential to alleviate poverty and promote shared prosperity, as recognised by the World Bank [9]. 

COCOA’s commitment to ethical finance extends beyond faith-based investors, as it aims to attract all individuals drawn by both competitive returns and ethical values. The company foresees a growing number of non-faith-based investors recognising the advantages of Sharia-compliant investment solutions. Such solutions are gaining popularity among non-faith investors who seek to fund socially beneficial projects with sustainable returns. 

Ernst and Young reports that as millennials accumulate wealth, businesses should adapt their strategies to accommodate socially responsible investors [10]. The research also reveals that millennial investors are nearly twice as likely to invest in companies or funds targeting specific social or environmental outcomes while valuing transparency and ethically responsible practices. 

How will COCOA work?   

Users will be able to download the COCOA app, set up within minutes, and receive a free investment plan tailored to their financial goals and risk profile. After identity verification, they may fund their plans through regular top-ups and ad-hoc payments for faster goal achievement. COCOA’s Investment Manager will manage fund selection, monitoring, and rebalancing, ensuring a diversified portfolio of Islamic-compliant investments that align with each client’s risk profile. The company will charge an annual management fee based on the customer’s investment tier. They are committed to invest only in certified Islamic-compliant funds, which they say can often be difficult for retail investors to access or require high minimum investments. COCOA strives to remove these barriers while emphasising fee transparency and investment details. They have an ambitious product roadmap of which they aim to execute in order to impact the investment industry. 

Why COCOA is excited… 

COCOA has achieved a significant milestone by successfully completing a sandbox program under the Central Bank of Bahrain, a renowned global regulator in Islamic banking.

In 2022, COCOA won more than 22 awards including Best Emerging Halal Investment Application from the International Finance Awards [11] and “The Next 100 Global Awards 2023 – Islamic Investment App” [12]. Within the Islamic Fintech industry, the company is seen as a leader. In addition, the CEO recently spoke at Mansion House at a high-profile Islamic Banking event hosted by the UK government. 

The next steps… 

COCOA is dedicated to building a fully digital investment platform for Muslim retail investors, catering to both new and experienced investors worldwide. Initially, the company’s focus in on the UK and EU markets, with plans to expand into Saudia Arabia, Indonesia, and India. Subsequently, COCOA intends to broaden its reach to include Nigeria, countries in North Africa, and Pakistan. To accomplish its objectives, COCOA recognises the importance of obtaining regulatory licenses in each respective jurisdiction. The granting of these licenses is at the discretion of individual regulators, and currently, COCOA does not hold regulatory licenses in any jurisdiction. However, to facilitate the application process, COCOA has partnered with EY, utilising its knowledge and experience in securing regulatory licenses in major markets.  

**Floww Markets Limited is a company authorised and regulated by the Financial Conduct Authority (FCA). Firm reference number 980098.

The information and imagery contained within this article does not represent the opinions of Floww. Floww does not have a view on opinions provided by COCOA Invest in this article and elsewhere where they may be expressed, and is not responsible or liable for the information within this article