Fintech Strategies of Islamic Banks: A Global Empirical Analysis

Abstract

As new digitalization strategies storm the banking industry, banks which are behind the technological curve may struggle to keep pace. This is a well-known challenge in the Islamic banking sector in particular; however, this research shows that little is being done in order to achieve unified digitalization in operations. The 2020 Global Islamic Bankers Survey (GIBS) from CIBAFI sought opinions and data from 101 Islamic banks, which outlined both their institutions’ adoption of financial technology and their awareness of existing technologies. In addition, several technology trends—such as AI, machine learning, DLTs, and P2P lending—were analyzed separately in order to understand how they may be implemented within Islamic banking. This paper performed different statistical procedures to answer these research questions via correlation analysis and one-way ANOVA. The data were compiled and analyzed using SPSS software. In doing so, this study clarified the perspective of Islamic banks on digital transformation and answered whether Islamic banks are taking the right direction in terms of their digitalization strategies. Interestingly, most newly developing technologies have a low implementation level in Islamic banking operations globally, with the exception of mobile banking, which already has a vast global infrastructure. The results may serve as a warning to Islamic banks to invest more capital and energy in the developing fields of financial technologies in order to keep abreast of their conventional banking counterparts.

Fintech, Digitalization, and Blockchain in Islamic Finance: Retrospective Investigation

“…Islamic finance is a younger and more dynamic ecosystem than conventional finance. This fact opens the door for higher chances of innovation in Islamic Fintech, as justified above in this paper [7,9,10]. Majority of the literature that discusses Islamic Fintech focuses on its opportunities and potential [11][12][13].…”

“…Islamic finance is a younger and more dynamic ecosystem than conventional finance. This fact opens the door for higher chances of innovation in Islamic Fintech, as justified above in this paper [7,9,10]. Majority of the literature that discusses Islamic Categorization is carefully completed by reviewing each article and dividing them by the sub-industries of Islamic finance by relevance.…”

“…Certain technologies are at the heart of this transformation, including AI, machine learning, big data, mobile internet, blockchain, and other DLT technologies. Aysan et al [10] explained in their paper that most Islamic banks are performing stagnant at utilizing these technologies, except for mobile banking. The main reason for this technicality is that the mobile banking infrastructure is widely used; however, other technologies mentioned here require significant R&D and infrastructure investment.…”

“…Pernot [72] explains that the average waiting time of customers per click is no more than a few seconds, meaning that customers would not prefer a system that keeps processing transactions for more than a few seconds. Especially Generation Z has very high expectations of speed, ease, and smooth interface, which makes it very difficult for institutions to update themselves while staying competitive [10]. Without an efficient use of digital systems, blockchain, and several other concepts such as AI, machine learning, big data, IoT, etc., any institution would immediately fade away from the markets.…”

Assessing the Financial Impact of Mergers on Islamic Banks: A Case Study of Sustainable Finance and Maqasid Approach

“…The first bank merger in Qatar was announced by two institutions in 2019, continuing a trend seen across the Gulf. Barwa Bank and International Bank of Qatar (IBQ) said in April that the negotiations had ended, and all regulatory conditions needed to combine activities had been met (Aysan et al, 2022).…”