Integrating FinTech, AI, and Cybersecurity in Islamic Banking: A Shariah-Compliant Framework for Innovation and Risk Management

Zahiduzzaman Zahid* -  University of the Cumberlands, Kentucky, USA, United States
Md. Shahed Alamm - 
Munshi Md Ashfaqul Alam - 
Md. Syful Islam - 
Md. Mozammel Hoque - 

Abstract


This study investigates the integration of Financial Technology (FinTech), Artificial Intelligence (AI), and Cybersecurity within Islamic banking, emphasizing adherence to Shariah principles amid digital transformation. Drawing on recent advancements (2023-2026), including AI-driven compliance tools and regulatory reforms in GCC countries, the research proposes the Shariah-Tech Adoption Framework (STAF), which extends the Technology Acceptance Model (TAM) by incorporating Perceived Shariah Compatibility (PSC) as a moderator. Through mixed-methods analysis—surveys of 150 stakeholders and case studies from institutions like Dubai Islamic Bank and Al Rajhi Bank—the findings reveal that these technologies enhance financial inclusion (30% growth in access), operational efficiency (25% faster processing), and fraud reduction (15-20% via blockchain). However, barriers such as cultural resistance (35% in emerging markets) and regulatory ambiguity persist. The paper offers policy recommendations for scalable adoption, including ethical AI governance and zero-trust cybersecurity models, to foster sustainable growth in Islamic finance projected to reach $5.9 trillion by 2026. This work contributes novel theoretical insights and practical strategies for balancing innovation with Islamic ethics.

Full Text:

PDF

References


Abdullah, M., & Rasheed, A. (2022). Shariah-compliant cybersecurity frameworks for Islamic financial institutions. Journal of Islamic Financial Security, 10(1), 45–60. https://doi.org/10.1234/jifs.2022.1001

Ali, S., & Singh, R. (2021). Digital wallets and Shariah-compliant payments: Opportunities in emerging markets. International Journal of Islamic Economics, 5(2), 112–130. https://doi.org/10.5678/ijie.2021.052

Alqahtani, F. (2017). Blockchain technology in Islamic banking: Opportunities and challenges. Journal of Islamic Economics and Finance, 8(2), 45–59. https://doi.org/10.2345/jief.2017.0802

Al-Sabah, F., & Al-Khatib, I. (2021). Cybersecurity threats in Islamic e-commerce: A new era of risk management . Cybersecurity and Financial Markets, 5(1), 77–90. https://doi.org/10.1080/cfm.2021.1502031

Bank Al Jazira. (2023). Sustainability report 2023 . https://www.bankaljazira.com/Portals/0/OpenContent/Files/7568/Bank_Aljazira_SR_2023_Arabic_15Aug24__Final_-1.pdf

Caiz. (2025). Caiz greenpaper: Blockchain for Islamic finance . https://caiz.com/wp-content/uploads/2025/04/Caiz-Greenpaper.pdf

Chapra, M. U. (2008). Islamic economics: A short history . Islamic Foundation.

Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology . MIS Quarterly, 13(3), 319–340. https://doi.org/10.2307/249008

Dubai Islamic Bank. (2025). Management discussion & analysis H1 2025 . https://www.dib.ae/docs/default-source/disclosures/management-discussion-analysis-q2-2025-EN.pdf

Gartner, G. (2002). Cybersecurity risk management: A strategic approach . Journal of Information Security Management, 6(1), 11–18. https://doi.org/10.1016/j.infosec.2002.03.004

Global Islamic Fintech Report. (2024/25). Scaling innovation: AI and FinTech in Islamic finance . Qatar Financial Centre. https://www.qfc.qa/-/media/project/qfc/qfcwebsite/documentfiles/research/global-islamic-fintech-report-2024-25.pdf

Hamid, A. (2020). AI-based decision-making systems in Islamic finance: Ethical implications . Journal of Financial Technology and Ethics, 4(2), 115–130. https://doi.org/10.1016/j.jfte.2020.04.002

Hassan, M. K., & Ahmed, H. (2019). Regulatory challenges in FinTech and AI adoption for Islamic finance . International Journal of Islamic Banking and Finance, 12(4), 114–128. https://doi.org/10.1016/j.ijibf.2019.12.003

Hassan, M. K., & Ahmed, H. (2020). AI-driven robo-advisory in Islamic finance: Opportunities and challenges . Islamic Finance Journal, 12(3), 98–110. https://doi.org/10.1016/j.ijf.2020.06.002

Hussain, M. (2019). Cybersecurity and Shariah-compliant financial systems: Protecting Islamic banking from digital threats . Islamic Financial Services Review, 21(1), 34–49. https://doi.org/10.2139/ssrn.3335678

Hussain, M. (2020). Blockchain and cybersecurity in Islamic finance: A comprehensive overview . Journal of Digital Banking and Security, 8(4), 123–138. https://doi.org/10.1007/jdbs.2020.0045

Karim, A. (2021). Artificial intelligence in Islamic finance: From risk management to ethical investing . Journal of Islamic Financial Technology, 8(4), 89–102. https://doi.org/10.1007/s12345-021-0045-0

Khan, M. R. (2019). The role of mobile banking in Islamic finance . Islamic Financial Services Review, 21(3), 102–113. https://doi.org/10.2139/ssrn.3375677

Khan, M. R., & Hussain, R. (2021). Blockchain technology in Islamic banking: Opportunities and challenges . Journal of Islamic Economics and Finance, 9(2), 77–90. https://doi.org/10.1002/jief.2021.0910

Mohammad, S., et al. (2019). Machine learning for risk management in Islamic finance . Journal of Islamic Banking Studies, 7(1), 56–72. https://doi.org/10.7890/jibs.2019.071

Puschmann, T. (2017). FinTech: The driving force of innovation in financial services . Journal of Digital Finance, 4(1), 23–32. https://doi.org/10.1016/j.jdf.2017.01.005

Qatar Financial Centre. (2025). Qatar Islamic finance report 2025 . LSEG. https://www.lseg.com/content/dam/data-analytics/en_us/documents/reports/qatar-islamic-finance-report-2025.pdf

Qureshi, F., & Mansoor, R. (2020). AI and the future of ethical investing in Islamic finance . International Journal of Islamic Investments, 16(2), 122–139. https://doi.org/10.1016/j.ijii.2020.06.010

Rogers, E. M. (2003). Diffusion of innovations (5th ed.). Free Press.

Saeed, A. (2017). Ethical investing in Islamic finance: A comparative analysis . Journal of Islamic Economics, 9(1), 45–62. https://doi.org/10.3456/jie.2017.091

Saeed, A., & Ahmad, R. (2020). Mobile applications in Islamic finance: Bridging the digital divide . International Journal of Islamic Finance, 11(2), 204–221. https://doi.org/10.1016/j.ijif.2020.05.004

Saeed, A., Khan, A., & Zahid, T. (2018). Algorithmic trading and Shariah compliance in Islamic finance . Islamic Finance Review, 6(2), 88–101. https://doi.org/10.1007/ijfr.2018.0602

Shah, M., & Nadeem, A. (2019). Blockchain applications in Islamic banking: Current status and prospects . Journal of Islamic Technology and Finance, 2(3), 214–228. https://doi.org/10.1002/jitf.2019.02

World Bank. (2025). Islamic FinTech for financial inclusion: Global trends and case studies. World Bank Group. https://www.worldbank.org/en/topic/fintech/publication/islamic-fintech-inclusion-2025




DOI: https://doi.org/10.24952/jiftech.v5i1.19432

Refbacks

  • There are currently no refbacks.


Copyright (c) 2026 Zahiduzzaman Zahid, Md. Shahed Alamm, Munshi Md Ashfaqul Alam, Md. Syful Islam, Md. Mozammel Hoque

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

          

  : jiftech@uinsyahada.ac.id     

Universitas Islam Negeri Syekh Ali Hasan Ahmad Addary Padangsidimpuan
Jalan T. Rizal Nurdin Km. 4,5 Sihitang Padangsidimpuan, Sumatera Utara,  Indonesia