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

In: Emerging Technology and Crisis Management in The Halal Industry

Author

Listed:
  • Siti Nor Amira Mohamad

    (Academy of Contemporary Islamic Studies (ACIS), University Teknologi MARA (UiTM) Shah Alam)

  • Nuradli Ridzwan Shah Mohd Dali

    (Universiti Sains Islam Malaysia (USIM))

  • Mohamad Yazis Ali Basah

    (Universiti Sains Islam Malaysia (USIM))

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.

Suggested Citation

  • Siti Nor Amira Mohamad & Nuradli Ridzwan Shah Mohd Dali & Mohamad Yazis Ali Basah, 2024. "Navigating the Moral Compass of Halal FinTech in Islamic Finance: Harvesting Benefits While Curbing Risks," Springer Books, in: Nor Aida Abdul Rahman & Mohd Helmi Ali (ed.), Emerging Technology and Crisis Management in The Halal Industry, chapter 0, pages 157-171, Springer.
    • Handle: RePEc:spr:sprchp:978-981-97-1375-2_10
    DOI: 10.1007/978-981-97-1375-2_10
    as

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