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Future of Islamic Finance
Adznan, Syaima Sanusi, Soliha Zaki, Hafizah Omar
Adznan, Syaima
Sanusi, Soliha
Zaki, Hafizah Omar
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2024-11-07
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Abstract
Digital transformation has made enormous changes in the banking domain, where financial technology (fintech) is the salient driving force inside it. For Islamic banking, artificial intelligence (AI) is one of the most innovative technologies that has shifted banks into the entire virtual environment. In this context, the main objectives of this chapter are to discuss the current application of AI in the Islamic banking industry, to identify the challenges faced by the banks in adapting AI while ensuring Shari’ah compliant in their operations, and to shed light on the future of banking and how it will influence Islamic banks in this digital era. This chapter also provides several examples of the application of several Shari’ah robo-advisors used by Islamic banks. Robo advisors are mainly an advanced AI tool involved in investment and portfolio management. The unique value of AI for Islamic banks lies within its own-Shari’ah AI framework that is used to fulfill Shari’ah-related matters, which requires active collaboration between Shari’ah scholars, regulatory bodies, and Islamic banks. Despite all the challenges, AI holds immense potential for Islamic banking to improve efficiency, accessibility, and risk management. Finally, the chapter paves the way for further discussion on building a responsible and innovative Islamic financial system in the era of AI.
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The Future of Islamic Finance: From Shari’ah Law to Fintech