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

• Published in: Emerging Technology and Crisis Management in The Halal Industry: Issues and Recent Developments
• Main Author: Mohamad S.N.A.; Dali N.R.S.M.; Basah M.Y.A.
• Format: Book chapter
• Language: English
• Published: Springer Nature 2024
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85207550897&doi=10.1007%2f978-981-97-1375-2_10&partnerID=40&md5=2e9df6fa633d79256dbff6dfcd7c2adc

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 advance-ment of Islamic finance. These companies operate in several industries, encom-passing technology-based solutions, trade financing, crowdfunding, asset manage-ment, and digital transactions. Islamic FinTech transforms financial services by digi-tizing 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. © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2024.