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The Emergence of Islamic Fintech and Its Applications

Year 2023, Volume: 9 Issue: 2, 212 - 236, 29.09.2023

Gökmen Kılıç Yavuz Türkan

https://doi.org/10.54427/ijisef.1328087

Abstract

Islamic Fintech is a disruptive force in the financial sector, promising increased financial inclusion, economic development, and a plethora of efficient, transparent, Shariah-compliant financial solutions due to its integration of technology with Islam’s profound ethical principles. This paper examines “Islamic Fintech,” a swiftly expanding component of the global financial ecosystem that combines financial technology with Shariah principles derived from the Holy Qur’an and the Sunnah. This burgeoning industry seeks to align finance with Islamic ethical and moral codes, with an emphasis on the prohibition of usury, speculation, and investments in immoral goods. This paper also examines the origins, applications, and regulatory governance of Islamic Fintech. It highlights the breadth of its innovative applications, such as Shariah-compliant digital banking, crowdfunding, and P2P lending platforms, as well as the incorporation of cutting-edge technology such as AI and machine learning for risk assessment and investment strategies, blockchain technology for Islamic cryptocurrencies, and Insurtech for the streamlined distribution of Islamic insurance products. In addition, the paper elaborates on the delineates the role of RegTech in Islamic fintech, discussing its applications and potential. The emergence of Islamic Fintech highlights the global desire to combine ethical finance with modern technical advancements. The article considers Islamic Fintech’s potential popular appeal as a preferred financial system, emphasising the balance between rapid technology innovation and deep-rooted Shariah norms.

Keywords

islamic fintech financial computing technologies Regtech

Project Number

2214

References

  • Adeyemi, A., & Nakhooda, M. (2018). Fintech in Islamic Finance: Digitalization of Islamic Financial Services. In I. Hasan, M. K. Hassan, & M. O. Oseni (Eds.), Handbook of Empirical Research on Islam and Economic Life (pp. 752-771). Edward Elgar Publishing.
  • Ahmed, H. (2011). Product development in Islamic banks. Edinburgh University Press.
  • Arner, D. W., Barberis, J. N., & Buckley, R. P. (2015). The evolution of Fintech: A new post-crisis paradigm?. Georgetown Journal of International Law, 47(4), 1271-1319.
  • Arner, D. W., Barberis, J. N., & Buckley, R. P. (2015). The Evolution of Fintech: A New Post-Crisis Paradigm? SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2676553.
  • Asutay, M. (2007). Conceptualisation of the second best solution in overcoming the social failure of Islamic finance: Examining the overpowering of homoislamicus by homoeconomicus. IIUM Journal of Economics and Management, 15(2), 167-195.
  • Asutay, M. (2012). Conceptualising and locating the social failure of Islamic finance: Aspirations of Islamic moral economy vs. the realities of Islamic finance. Asian and African Area Studies, 11(2), 93-113.
  • Blossom Finance. (2023). Halal microfinance for everyone. Retrieved 10 June 2023 from https://www.blossomfinance.com
  • Chapra, M. U. (2000). The future of economics: An Islamic perspective. The Islamic Foundation.
  • Dawood, H., Al Zadjali, D. F., Al Rawahi, M., Karim, D. S., & Hazik, D. M. (2022). Business trends & challenges in Islamic FinTech: A systematic literature review. F1000Research, 11, 329. https://doi.org/10.12688/f1000research. 109400.1
  • Demirgüç-Kunt, A., Klapper, L., Singer, D., Ansar, S., & Hess, J. (2018). The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. World Bank.
  • El-Gamal, M. A. (2006). Islamic finance: Law, economics, and practice. Cambridge University Press.
  • EthisCrowd. (2021). EthisCrowd.com | Real Estate Islamic Crowdfunding. Retrieved 27 June 2023 from https://www.ethiscrowd.com/
  • Gai, K., Qiu, M., & Sun, X. (2018). A survey on FinTech. Journal of Network and Computer Applications, 103, 262-273.
  • Gheeraert, L. (2014). Does Islamic finance spur banking sector development?. Journal of Economic Behavior & Organization, 103, S4-S20.
  • GIFT (2022). The Global Islamic Fintech Report 2022. Retrieved 11 June 2023 from https://www.dinarstandard.com/post/global-islamic-fintech-report- 2022
  • Gomber, P., Kauffman, R. J., Parker, C., & Weber, B. W. (2018). On the Fintech revolution: Interpreting the forces of innovation, disruption, and transformation in financial services. Journal of Management Information Systems, 35(1), 220-265.
  • Hasan, R., Hassan, M. K., & Aliyu, S. (2020). Fintech and Islamic Finance: Literature Review and Research Agenda. International Journal of Islamic Economics and Finance (IJIEF), 3(1). https://doi.org/10.18196/ijief.2122
  • Hassan, M. K., & Lewis, M. K. (2007). Handbook of Islamic banking. Edward Elgar Publishing.
  • Hassan, M. K., Antoniou, A., & Paudyal, K. (2005). Impact of ethical screening on investment performance: The case of the Dow Jones Islamic Index. Islamic Economic Studies, 12(2), 67-97.
  • Hodge, V. J., & Austin, J. (2004). A survey of outlier detection methodologies. Artificial intelligence review, 22(2), 85-126.
  • Iqbal, Z., & Mirakhor, A. (2011). An Introduction to Islamic finance: Theory and practice. John Wiley & Sons.
  • Jumat, Z. H., Khateeb, S. H., & Ali, S. N. (Eds.). (2023). Islamic Finance, FinTech, and the Road to Sustainability: Reframing the Approach in the Post-Pandemic Era. Palgrave Macmillan. https://doi.org/10.1007/978-3-031-13302-2
  • Maybank. (2021). Maybank Islamic Personal Banking. Retrieved 12 June 2023 from https://www.maybank2u.com.my/maybank2u/malaysia/en/personal/ islamic.page
  • Muryanto, Y. T., Kharisma, D. B., & Ciptorukmi Nugraheni, A. S. (2021, October18). Prospects and challenges of Islamic fintech in Indonesia: a legal viewpoint. International Journal of Law and Management, 64(2), 239–252. https:// doi.org/10.1108/ijlma-07-2021-0162
  • Noor Takaful. (2021). Family Takaful and General Takaful Solutions in the UAE. Retrieved 9 June 2023 from https://www.noortakaful.com/
  • Path Solutions. (2021). iMAL Islamic Banking & Investment platform. Retrieved 13 June 2023 from https://www.path-solutions.com/solutions/imal/
  • Qudah, H., Malahim, S., Airout, R., Alomari, M., Hamour, A. A., & Alqudah, M. (2023). Islamic Finance in the Era of Financial Technology: A Bibliometric Review of Future Trends. International Journal of Financial Studies, 11(2), 76.
  • Rammal, H. G., & Zurbruegg, R. (2007, August). Awareness of Islamic banking products among Muslims: The case of Australia. Journal of Financial Services Marketing, 12(1), 65–74. https://doi.org/10.1057/palgrave.fsm.4760060
  • Rammal, H. G., & Zurbruegg, R. (2010). The impact of regulatory quality on intra-foreign direct investment flows in the ASEAN markets. International Business Review, 19(2), 209-221.
  • Raza Rabbani, M., Bashar, A., & Khan, S. (2021). Agility and Fintech is the Future of Islamic Finance: A Study from Islamic Banks in Bahrain. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3783171
  • Saad, A. A., Alhabshi, S. M., Noor, A. B. M., & Hassan, R. (2020). Robo-advisory for Islamic Financial Institutions: Shari’ah and Regulatory issues. European Journal of Islamic Finance. https://doi.org/10.13135/2421-2172/3992
  • Salam Takaful (2023.) Digital Takaful for everyone. Retrieved 10 June 2023 from https://www.salamtakaful.com
  • Selcuk, M., & Kaya, S. (2021, February 15). A Critical Analysis of Cryptocurrencies from an Islamic Jurisprudence Perspective. Turkish Journal of Islamic Economics, 8(1), 137–152. https://doi.org/10.26414/a130
  • Stellar. (2021). Stellar receives Sharia compliance certification for payments and asset tokenization. Retrieved 3 June 2023 from https://www.stellar. org/press-releases/stellar-receives-sharia-compliance-certification-for-payments- and-asset-tokenization
  • Sultan, J., & Bechter, C. (2019, June 14). Big Data Analytics in Islamic Banking. International Academic Journal of Business Management, 06(01), 21–31. https:// doi.org/10.9756/iajbm/v6i1/1910003
  • Syamlan, Y. T., & Antonio, M. S. (2023). A Bibliometric Analysis of Islamic Regtech Research Indexed by Dimension.AI. Airlangga International Journal of Islamic Economics and Finance, 6(01), 22–32. https://doi.org/10.20473/aijief.v6i01.44284
  • Wahed Invest. (2021). Halal Investing | Investment Services for Muslim Community. Retrieved 4 June 2023 from https://wahedinvest.com/
  • Wilson, J. A. (2014). The halal phenomenon: An extension or a new paradigm?. Social Business, 4(3), 255-271.
  • World Bank (2022). COVID-19 Boosted the Adoption of Digital Financial Services Retrieved 14 June 2023 from https://www.worldbank.org/en/news/feature/2022/07/21/covid-19-boosted-the-adoption-of-digital-financial-services
  • Zilzar Life. (2021). Zilzar | Halal Platform. Retrieved 6 June 2023 from https://www.zilzarlife.com/

Year 2023, Volume: 9 Issue: 2, 212 - 236, 29.09.2023

Gökmen Kılıç Yavuz Türkan

https://doi.org/10.54427/ijisef.1328087

Abstract

Supporting Institution

Tübitak

Project Number

2214

References

  • Adeyemi, A., & Nakhooda, M. (2018). Fintech in Islamic Finance: Digitalization of Islamic Financial Services. In I. Hasan, M. K. Hassan, & M. O. Oseni (Eds.), Handbook of Empirical Research on Islam and Economic Life (pp. 752-771). Edward Elgar Publishing.
  • Ahmed, H. (2011). Product development in Islamic banks. Edinburgh University Press.
  • Arner, D. W., Barberis, J. N., & Buckley, R. P. (2015). The evolution of Fintech: A new post-crisis paradigm?. Georgetown Journal of International Law, 47(4), 1271-1319.
  • Arner, D. W., Barberis, J. N., & Buckley, R. P. (2015). The Evolution of Fintech: A New Post-Crisis Paradigm? SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2676553.
  • Asutay, M. (2007). Conceptualisation of the second best solution in overcoming the social failure of Islamic finance: Examining the overpowering of homoislamicus by homoeconomicus. IIUM Journal of Economics and Management, 15(2), 167-195.
  • Asutay, M. (2012). Conceptualising and locating the social failure of Islamic finance: Aspirations of Islamic moral economy vs. the realities of Islamic finance. Asian and African Area Studies, 11(2), 93-113.
  • Blossom Finance. (2023). Halal microfinance for everyone. Retrieved 10 June 2023 from https://www.blossomfinance.com
  • Chapra, M. U. (2000). The future of economics: An Islamic perspective. The Islamic Foundation.
  • Dawood, H., Al Zadjali, D. F., Al Rawahi, M., Karim, D. S., & Hazik, D. M. (2022). Business trends & challenges in Islamic FinTech: A systematic literature review. F1000Research, 11, 329. https://doi.org/10.12688/f1000research. 109400.1
  • Demirgüç-Kunt, A., Klapper, L., Singer, D., Ansar, S., & Hess, J. (2018). The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. World Bank.
  • El-Gamal, M. A. (2006). Islamic finance: Law, economics, and practice. Cambridge University Press.
  • EthisCrowd. (2021). EthisCrowd.com | Real Estate Islamic Crowdfunding. Retrieved 27 June 2023 from https://www.ethiscrowd.com/
  • Gai, K., Qiu, M., & Sun, X. (2018). A survey on FinTech. Journal of Network and Computer Applications, 103, 262-273.
  • Gheeraert, L. (2014). Does Islamic finance spur banking sector development?. Journal of Economic Behavior & Organization, 103, S4-S20.
  • GIFT (2022). The Global Islamic Fintech Report 2022. Retrieved 11 June 2023 from https://www.dinarstandard.com/post/global-islamic-fintech-report- 2022
  • Gomber, P., Kauffman, R. J., Parker, C., & Weber, B. W. (2018). On the Fintech revolution: Interpreting the forces of innovation, disruption, and transformation in financial services. Journal of Management Information Systems, 35(1), 220-265.
  • Hasan, R., Hassan, M. K., & Aliyu, S. (2020). Fintech and Islamic Finance: Literature Review and Research Agenda. International Journal of Islamic Economics and Finance (IJIEF), 3(1). https://doi.org/10.18196/ijief.2122
  • Hassan, M. K., & Lewis, M. K. (2007). Handbook of Islamic banking. Edward Elgar Publishing.
  • Hassan, M. K., Antoniou, A., & Paudyal, K. (2005). Impact of ethical screening on investment performance: The case of the Dow Jones Islamic Index. Islamic Economic Studies, 12(2), 67-97.
  • Hodge, V. J., & Austin, J. (2004). A survey of outlier detection methodologies. Artificial intelligence review, 22(2), 85-126.
  • Iqbal, Z., & Mirakhor, A. (2011). An Introduction to Islamic finance: Theory and practice. John Wiley & Sons.
  • Jumat, Z. H., Khateeb, S. H., & Ali, S. N. (Eds.). (2023). Islamic Finance, FinTech, and the Road to Sustainability: Reframing the Approach in the Post-Pandemic Era. Palgrave Macmillan. https://doi.org/10.1007/978-3-031-13302-2
  • Maybank. (2021). Maybank Islamic Personal Banking. Retrieved 12 June 2023 from https://www.maybank2u.com.my/maybank2u/malaysia/en/personal/ islamic.page
  • Muryanto, Y. T., Kharisma, D. B., & Ciptorukmi Nugraheni, A. S. (2021, October18). Prospects and challenges of Islamic fintech in Indonesia: a legal viewpoint. International Journal of Law and Management, 64(2), 239–252. https:// doi.org/10.1108/ijlma-07-2021-0162
  • Noor Takaful. (2021). Family Takaful and General Takaful Solutions in the UAE. Retrieved 9 June 2023 from https://www.noortakaful.com/
  • Path Solutions. (2021). iMAL Islamic Banking & Investment platform. Retrieved 13 June 2023 from https://www.path-solutions.com/solutions/imal/
  • Qudah, H., Malahim, S., Airout, R., Alomari, M., Hamour, A. A., & Alqudah, M. (2023). Islamic Finance in the Era of Financial Technology: A Bibliometric Review of Future Trends. International Journal of Financial Studies, 11(2), 76.
  • Rammal, H. G., & Zurbruegg, R. (2007, August). Awareness of Islamic banking products among Muslims: The case of Australia. Journal of Financial Services Marketing, 12(1), 65–74. https://doi.org/10.1057/palgrave.fsm.4760060
  • Rammal, H. G., & Zurbruegg, R. (2010). The impact of regulatory quality on intra-foreign direct investment flows in the ASEAN markets. International Business Review, 19(2), 209-221.
  • Raza Rabbani, M., Bashar, A., & Khan, S. (2021). Agility and Fintech is the Future of Islamic Finance: A Study from Islamic Banks in Bahrain. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3783171
  • Saad, A. A., Alhabshi, S. M., Noor, A. B. M., & Hassan, R. (2020). Robo-advisory for Islamic Financial Institutions: Shari’ah and Regulatory issues. European Journal of Islamic Finance. https://doi.org/10.13135/2421-2172/3992
  • Salam Takaful (2023.) Digital Takaful for everyone. Retrieved 10 June 2023 from https://www.salamtakaful.com
  • Selcuk, M., & Kaya, S. (2021, February 15). A Critical Analysis of Cryptocurrencies from an Islamic Jurisprudence Perspective. Turkish Journal of Islamic Economics, 8(1), 137–152. https://doi.org/10.26414/a130
  • Stellar. (2021). Stellar receives Sharia compliance certification for payments and asset tokenization. Retrieved 3 June 2023 from https://www.stellar. org/press-releases/stellar-receives-sharia-compliance-certification-for-payments- and-asset-tokenization
  • Sultan, J., & Bechter, C. (2019, June 14). Big Data Analytics in Islamic Banking. International Academic Journal of Business Management, 06(01), 21–31. https:// doi.org/10.9756/iajbm/v6i1/1910003
  • Syamlan, Y. T., & Antonio, M. S. (2023). A Bibliometric Analysis of Islamic Regtech Research Indexed by Dimension.AI. Airlangga International Journal of Islamic Economics and Finance, 6(01), 22–32. https://doi.org/10.20473/aijief.v6i01.44284
  • Wahed Invest. (2021). Halal Investing | Investment Services for Muslim Community. Retrieved 4 June 2023 from https://wahedinvest.com/
  • Wilson, J. A. (2014). The halal phenomenon: An extension or a new paradigm?. Social Business, 4(3), 255-271.
  • World Bank (2022). COVID-19 Boosted the Adoption of Digital Financial Services Retrieved 14 June 2023 from https://www.worldbank.org/en/news/feature/2022/07/21/covid-19-boosted-the-adoption-of-digital-financial-services
  • Zilzar Life. (2021). Zilzar | Halal Platform. Retrieved 6 June 2023 from https://www.zilzarlife.com/
There are 40 citations in total.

Details

Primary Language English
Subjects Islamic Economy
Journal Section Articles
Authors

Gökmen Kılıç 0000-0002-2462-1675

Yavuz Türkan 0000-0002-0227-9346

Project Number 2214
Publication Date September 29, 2023
Published in Issue Year 2023 Volume: 9 Issue: 2

Cite

APA Kılıç, G., & Türkan, Y. (2023). The Emergence of Islamic Fintech and Its Applications. International Journal of Islamic Economics and Finance Studies, 9(2), 212-236. https://doi.org/10.54427/ijisef.1328087
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