Reimagining Islamic Microfinance in the Digital Era: Integrating Fintech Innovation with Maqasid al-Shariah for Sustainable Financial Inclusion

Abstract

This study explores the integration of fintech innovation with maqasid al-shariah principles in reimagining Islamic microfinance for sustainable financial inclusion in the digital era. Grounded in a qualitative approach, the research employs semi-structured interviews with practitioners, fintech entrepreneurs, Shariah scholars, regulators, and beneficiaries across selected Muslim-majority countries such as Indonesia, Malaysia, and Pakistan. Supplementary document analysis and observations were used to triangulate the findings. Thematic analysis following Braun and Clarke’s (2006) six-phase framework revealed four major themes: fintech as an enabler of accessibility and transparency, maqasid al-shariah as the ethical compass of digital transformation, regulatory and governance challenges, and the social impact of fintech-driven inclusion. The findings show that fintech enhances operational efficiency, transparency, and outreach in Islamic microfinance, while maqasid al-shariah ensures that technological innovation remains anchored in ethical, just, and socially beneficial objectives. However, regulatory inconsistencies and digital literacy gaps continue to hinder the full realization of Shariah-based financial inclusion. The study concludes that harmonizing fintech innovation with Islamic moral and legal principles can transform Islamic microfinance into a more inclusive and equitable system. By demonstrating how digital technology can operationalize maqasid al-shariah, this research contributes both theoretically and practically to the discourse on ethical digital finance, offering a framework for policymakers, Islamic financial institutions, and fintech innovators to build a sustainable and value-driven financial ecosystem.