Financial Technology Efforts in the Development of Islamic Banking Industry: The Malaysian Experience as a Model

Abstract

Islamic banks serve as a strategic choice for a specific segment of investors looking to engage in Islamic financial transactions. In this context, this paper aims to highlight the contributions of financial technology in introducing financial innovations that drive the Islamic financial sector in Malaysia, as a model for keeping pace with global banking system developments. This research paper addresses three key aspects. The first aspect provides an overview of the theoretical foundations of financial technology. The second aspect discusses the reality of Islamic banks adopting financial technology. The third aspect focuses on presenting Malaysia's experience in utilizing financial technology applications for the development of the Islamic banking industry. The study results indicate a significant inclination of Islamic banking in Malaysia towards adopting financial technology applications in compliance with Islamic Sharia principles, such as crowdfunding platforms, cryptocurrencies, regulatory environments, artificial intelligence systems, and smart sukuk.