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The Future of Islamic Finance in the Era of Digital Transformation: Opportunities and Shariah Challenges

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DOI: 10.18535/sshj.v9i11.2093· Pages: 9317-9330· Vol. 9, No. 11, (2025)· Published: November 11, 2025
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Abstract

Islamic finance has emerged as one of the fastest-growing sectors in the global financial industry, offering ethical, interest-free, and Shariah-compliant alternatives to conventional finance. In recent years, the sector has been significantly impacted by digital transformation, which has reshaped financial services worldwide. The integration of financial technology (fintech), blockchain, artificial intelligence (AI), and digital banking has created new opportunities for Islamic financial institutions, including enhanced financial inclusion, operational efficiency, and greater transparency. However, these technological innovations also present unique Shariah compliance challenges. Questions surrounding the permissibility of cryptocurrencies, the use of blockchain-based smart contracts, and the governance of fintech platforms remain unresolved among Shariah scholars. This paper aims to examine the future of Islamic finance in the era of digital transformation, highlighting both the opportunities and the Shariah challenges. Through a qualitative analysis of existing literature, case studies of Islamic financial institutions, and regulatory developments in countries such as Malaysia, Saudi Arabia, and the United Arab Emirates, the study provides a comprehensive understanding of the evolving landscape. The paper concludes by recommending strategies for aligning digital financial innovation with Shariah principles to ensure sustainable growth in the Islamic finance industry.

Keywords

Islamic FinanceDigital TransformationFintechBlockchainShariah ComplianceCryptocurrency

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Author details
Md Mahbubur Rahman
Phd Researcher, Department of Islamic Studies, University of Rajshahi.
✉ Corresponding Author
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Abdul Matin
Department of Arabic, University of Rajshahi, Rajshahi-6205, Bangladesh
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Md. Asif Rifat
Department of Islamic Studies, University of Rajshahi, Rajshahi-6205, Bangladesh. Institute of Natural Resources Research and Development, Rajshahi-6206, Banglades
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