Exploring the Role of Islamic Fintech in Combating the Aftershocks of COVID-19: The Open Social Innovation of the Islamic Financial System

Abstract

The purpose of the current study is to investigate the role of the Islamic financial system in recovery post-COVID-19 and the way Fintech can be utilized to combat the economic reverberations created by COVID-19. The global financial crisis of 2008 has established the credentials of the Islamic financial system as a sustainable financial system which can save the long run interests of the average citizens around the world while adding value to the real economy. The basic ethical tenets available in the Islamic financial system make it more suited and readymade to fight the economic aftershocks of a pandemic like COVID-19. The basic principles of ethical Islamic finance have solid connections to financial stability and corporate social responsibility within the wide-reaching business context. With the emergence of Financial technology (Fintech) it has provided a missing impetus to the Islamic financial system to compete on equal ground with its conventional counterpart and prove its mettle. The study uses discourse analysis along with the content analysis to extract content and draw a conclusion. The findings of the study indicate that COVID-19 pandemic has provided the opportunity for the social and open innovation to grow and finance world have turned to open innovation to provide a speedy, timely, reliable, and sustainable solution to the world. The findings of the study provide significant implications for governments and policy makers in efficient application of Fintech and innovative Islamic financial services to fight the economic consequences of the COVID-19 pandemic.

Fintech Innovations in the Financial Service Industry

“…Banks and financial institutions played a major role in economic recovery and fintech was an indispensable tool to ensure financial liquidity of the society in general. Fintech has ensured improvement of quality of life, social equality, stable economy through financial inclusions and technology interface (Rabbani et al 2021). COVID-19 has been the platform of opportunities encouraging a significant number of uncluttered social innovations and at the same time reached the interested public in a swifter, unfailing, timely and sustainable way to fight economic inequalities (Rabbani et al 2021).…”

“…The synergy of fintech power along with traditional finance methods have improved cash flow and positive growth especially during COVID pandemics (Zhang et al 2022). Rabbani et al (2021) in their research investigated the importance of fintech advancements that facilitated a faster recovery of economic aftershocks generated by COVID-19 pandemics.…”

Islamic Fintech, Archaeology of a Discourse

“…On the contrary, it is an ensemble where the dispersion of the subject and its discontinuity with itself can be determined (Foucault, 1969, p.74). But it is still necessary that this in-depth analysis is within the reach of the understanding of the followers of the discourse on fintech who usually just copy and paste what is in vogue, especially in the Covid-19 period (Rabbani et al, 2021), without a critical mind. The value of a technique is not measured by its ability to solve a problem posed by an event phenomenon of which no one is able to really understand the ins and outs.…”

Determinants of Behavioral Intentions to Use Islamic Financial Technology: An Empirical Assessment

“…The field of Islamic finance is growing and gaining interest globally, irrespective of Islam followers, and it is appreciated even by non-Muslims. Islamic finance is the form of finance which uses sharia principles of ethics and morality at its core in its financial dealing (Dharani et al 2022;Rabbani et al 2021b;Naeem et al 2021). There was always a possibility that financial technology could contribute significantly to the development of Islamic finance (Banna et al 2021b).…”

“…If any transaction performed under Islamic finance uses technology without complying to sharia principles, then it is considered as Haram or invalid (Lajis 2019;Hassan et al 2020). Islamic finance has already embraced fintech based on technological advancements such as blockchain (Karim et al 2022), artificial intelligence (Khan et al 2021), cryptocurrency (Khan and Rabbani 2020); Regtech (Rabbani et al 2021b), crowdfunding and P2P lending (Nor et al 2021;Ascarya 2021). Briefly, fintech is about performing financial transactions with the use of disruptive, innovative and pioneering technology, whereas Islamic fintech is about doing all that within the sharia universe (Karim et al 2022;Khan et al 2021).…”