The Digital Transformation of Islamic Fintech to Promote Financial Inclusion and Accelerated Halal Financing

Abstract

This study aims to analyze the digital transformation of Islamic fintech in promoting financial inclusion and accelerating halal financing, with a focus on the issue of insufficient standards for Sharia compliance. The study employs a qualitative method with a case study design, as this approach enables an in-depth understanding of practices, perceptions, and the dynamics of Sharia supervision within the digital fintech ecosystem. The case study design was chosen to contextually explore the interactions among technological innovation, regulation, and Sharia principles. The research was conducted in Indonesia, specifically in Jakarta, Bandung, and Surabaya, which were selected because they represent centers of regulation, fintech innovation, and service users. The study involved nine informants regulators, Sharia supervisory board members, Islamic fintech leaders, academics, and users selected purposively due to their competence and direct involvement in Islamic fintech. The findings indicate that the digitalization of Islamic fintech is effective in expanding access to halal financing and increasing financial inclusion; however, it has not been matched by uniform Sharia compliance standards and adaptive supervision. The study recommends strengthening regulations, enhancing the capacity of Sharia supervision, and harmonizing policies between fintech and Islamic banking.