Harnessing AI for Islamic Finance Transformation: From Compliance Challenges to Digital Opportunities
DOI:
https://doi.org/10.53840/jmm.v16i1.323Keywords:
Artificial Intelligence , Islamic Fintech, Shariah Compliance, Islamic BankingAbstract
This study discusses the integration of Artificial Intelligence (AI) in the Islamic banking and finance system in Malaysia. The digital revolution has shown the use of AI as a key catalyst in improving operational efficiency, transaction security and customer service quality. Through a qualitative analysis approach of recent industry reports and academic literature, it has been found that AI offers various opportunities in strengthening Shariah compliance, optimizing risk management, and expanding financial inclusion through Islamic fintech applications. However, several challenges were identified including gharar issues in AI algorithms, data security, lack of Shariah-compliant AI technology expertise and the absence of specific legal guidelines. The study findings emphasize the need for a strong Islamic technoethical framework, human resource capacity development, and collaboration between regulators, to ensure that the use of AI in Islamic finance remains in line with the principles of maqasid al-shariah. Overall, the use of AI has great potential to strengthen the Malaysian Islamic finance ecosystem towards a more sustainable, ethical and inclusive system
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