Digital Shariah Banking: Balancing Innovation, Compliance, and Ethics in the Era of Islamic Fintech (i-Fintech)
Keywords:
Digital Shariah Banking,, Islamic Fintech, Shariah Compliance, Ethical Governance, Maqasid Al-Shariah, InnovationAbstract
This study explores the dynamic intersection between technological innovation, Shariah compliance, and ethical governance in the development of digital Shariah banking within the broader landscape of Islamic financial technology (i-Fintech). Employing a qualitative research design, data were collected through semi-structured interviews, document analysis, and case studies involving Islamic financial institutions, Fintech entrepreneurs, regulators, and Shariah scholars across Malaysia, Indonesia, and the Gulf Cooperation Council (GCC) countries. The findings reveal that successful digital transformation in Islamic banking depends on balancing innovation with adherence to Shariah principles and ethical accountability. Institutions that integrate Shariah supervision into their digital operations and emphasize ethical safeguards such as fairness, transparency, and data protection achieve higher levels of consumer trust and legitimacy. The study also finds that variations in regulatory frameworks and governance models shape diverse approaches to innovation and compliance across different jurisdictions. Theoretically, the research extends innovation diffusion and ethical finance theories into the context of Islamic digitalization, demonstrating that technological advancement in Islamic finance must align with Maqasid al-Shariah—the higher objectives of Islamic law. Practically, the study underscores the need for robust Shariah governance mechanisms, harmonized regulatory standards, and ethical-by-design innovation strategies. In conclusion, digital Shariah banking represents a transformative yet ethically grounded model of financial modernization that reaffirms the spiritual and moral essence of Islamic finance in the digital era.
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