Navigating the Moral Compass of Halal FinTech in Islamic Finance: Harvesting Benefits While Curbing Risks

Siti Nor Amira Mohamad, Nuradli Ridzwan Shah Mohd Dali and Mohamad Yazis Ali Basah ()
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Siti Nor Amira Mohamad: Academy of Contemporary Islamic Studies (ACIS), University Teknologi MARA (UiTM) Shah Alam
Mohamad Yazis Ali Basah: Universiti Sains Islam Malaysia (USIM)

Chapter Chapter 10 in Emerging Technology and Crisis Management in The Halal Industry, 2024, pp 157-171 from Springer

Abstract: Abstract The exponential expansion of Malaysia's FinTech sector, characterized by a substantial increase from 193 to 313 companies over a span of four years, highlights its robustness and ability to adjust to evolving economic environments. Islamic FinTech, representing 5% of the market, demonstrates the sector's progress by combining technical innovation with Sharia rules. Malaysia's strong position on the Global Islamic FinTech (GIFT) Index may be attributed to several important factors. These include a well-developed regulatory framework, active government backing, a wide range of skilled professionals, modern infrastructure, and a flourishing capital market. The inclusion of Islamic FinTech companies is crucial in driving the advancement of Islamic finance. These companies operate in several industries, encompassing technology-based solutions, trade financing, crowdfunding, asset management, and digital transactions. Islamic FinTech transforms financial services by digitizing payment systems while guaranteeing strict compliance with Sharia principles. Blockchain technology improves the visibility of transactions, while peer-to-peer lending platforms adhere to Islamic financial norms. The utmost importance is placed on ethical issues, with a focus on adhering to Sharia principles, safeguarding customer privacy, ensuring appropriate utilization of artificial intelligence, and fostering a good impact on society. It is essential to have strong risk mitigation measures that cover Sharia compliance, operational resilience, data security, market dynamics, and consumer protection. Malaysia's dedication to achieving a harmonic equilibrium between technology advancement and ethical principles in Islamic finance serves as a potential model. The nation's prominence in the Global Islamic FinTech Index demonstrates the capacity of FinTech to establish a financially inclusive and socially beneficial financial system based on ethical principles, while also advocating for justice and financial inclusion.

Keywords: FinTech; Halal FinTech; Islamic finance; Islamic FinTech; Blockchain (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/978-981-97-1375-2_10

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