Integrating Fintech in Malaysia’s Islamic Banking Sector: A Conceptual Study

Daing Maruak Sadek, Azyyati Anuar, Sakinatul Raadiyah Bt Abdullah, Suhaida Binti Abu Bakar, Nik Liyana Mustapa Nik Daud and Hylmun Izhar
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Daing Maruak Sadek: Academy of Contemporary Islamic Studies, Universiti Teknologi MARA (UiTM) Cawangan Kedah, Kampus Sungai Petani, 08400 Merbok, Malaysia
Azyyati Anuar: Faculty of Business and Management, Digital Innovation & Social Entrepreneurship, Universiti Teknologi MARA (UiTM) Cawangan Kedah, Kampus Sungai Petani, 08400 Merbok, Malaysia
Sakinatul Raadiyah Bt Abdullah: Academy of Contemporary Islamic Studies, Universiti Teknologi MARA (UiTM) Cawangan Kedah, Kampus Sungai Petani, 08400 Merbok, Malaysia
Suhaida Binti Abu Bakar: Academy of Contemporary Islamic Studies, Digital Innovation & Social Entrepreneurship, Universiti Teknologi MARA (UiTM) Cawangan Kedah, Kampus Sungai Petani, 08400 Merbok, Malaysia
Nik Liyana Mustapa Nik Daud: Academy of Contemporary Islamic Studies, Universiti Teknologi MARA (UiTM) Cawangan Kedah, Kampus Sungai Petani, 08400 Merbok, Malaysia
Hylmun Izhar: Islamic Research and Training Institute, Jeddah Saudi Arabia

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 11, 1433-1440

Abstract: This conceptual study explores the integration of financial technology (fintech) within Malaysia’s Islamic banking sector, focusing on its impact on operational efficiency, customer engagement, and adherence to Shariah principles. With rapid advancements in digital finance, Islamic banks in Malaysia are increasingly adopting fintech innovations—such as mobile banking, blockchain, and digital payment systems—to enhance service accessibility while upholding ethical standards. Through a review of relevant literature and key studies, this research highlights how fintech adoption improves both operational performance and customer satisfaction in compliance with Shariah principles. Findings indicate that fintech not only enhances efficiency but also promotes financial inclusion by providing underserved populations with Shariah-compliant financial services. Applying the Technology Acceptance Model (TAM) and Stakeholder Theory, the study underscores the role of user satisfaction and the importance of balancing technological innovation with ethical and regulatory considerations. The practical implications suggest that Islamic banks in Malaysia can leverage fintech to strengthen their competitive edge while aligning with regulatory frameworks that ensure Shariah compliance. However, the study is limited by its focus on Malaysia, suggesting the need for comparative analysis across regions with differing regulatory environments. Future research should investigate the long-term impact of fintech on financial stability in Islamic banking and examine fintech’s role in achieving global sustainability goals, particularly regarding Environmental, Social, and Governance (ESG) criteria. This study underscores the transformative potential of fintech in driving sustainable growth within the Islamic finance sector, positioning Malaysia’s Islamic banks as leaders in ethical and inclusive finance.

Date: 2024
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