Fintech innovations and Islamic banking performance: Post-pandemic challenges and opportunities


Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

This study explores the pivotal role of financial technology (FinTech) in the performance of Islamic banks and financial institutions, considering both challenges and opportunities encountered during the pandemic-induced market disruptions. Amid lockdowns and economic uncertainties, the study delves into the strategies adopted by several countries, with a particular emphasis on Gulf Cooperation Council (GCC) countries, along with Jordan, Indonesia, Malaysia, and Pakistan, underscoring the importance of technological innovation in fostering a dynamic Islamic finance sector. Utilizing a data analysis approach, the study assesses the impact of heightened digitalization and the integration of FinTech on the resilience of the Islamic finance industry within an inherently volatile environment, marked by challenges during pre and post pandemics. The findings reveal that the adoption of FinTech fortifies the industry’s resilience and unveils novel growth prospects. However, the study also identifies potential avenues for expansion, particularly in Sukuk issuance, through the implementation of regulatory guidelines and faster adoption. The research underscores the transformative influence of financial technology reforms on the growth trajectory of Islamic banks. In light of the superior performance of Islamic banking in selected domains, this study advocates for a paradigm shift within the industry, encouraging the robust development of FinTech solutions to enhance its global market presence.

The authors would like to acknowledge that this research work was partially financed by Kingdom University, Bahrain from the research grant number: 2023 - 10 - 012.

view full abstract hide full abstract
    • Figure 1. Growth of Islamic financial assets
    • Figure 2. Global Islamic finance asset distribution
    • Figure 3. Sukuk’s outstanding sector-wise
    • Figure 4. Islamic banking asset share of total banking assets in selected economies
    • Figure 5. Islamic banking vs conventional banking assets by share and asset by growth during COVID-19
    • Figure 6. Islamic equity indices (2011–2021 YTD)
    • Figure 7. Sector breakdown
    • Conceptualization
      Abdul Aziz Abdul Rahman, Habeeb Ur Rahiman
    • Formal Analysis
      Abdul Aziz Abdul Rahman
    • Funding acquisition
      Abdul Aziz Abdul Rahman, Ahmed Rashad Amin
    • Project administration
      Abdul Aziz Abdul Rahman
    • Software
      Abdul Aziz Abdul Rahman, Habeeb Ur Rahiman
    • Writing – original draft
      Abdul Aziz Abdul Rahman, Habeeb Ur Rahiman
    • Writing – review & editing
      Abdul Aziz Abdul Rahman, Habeeb Ur Rahiman, Abdelrhman Meero, Ahmed Rashad Amin
    • Investigation
      Habeeb Ur Rahiman, Ahmed Rashad Amin
    • Supervision
      Habeeb Ur Rahiman, Abdelrhman Meero
    • Data curation
      Abdelrhman Meero
    • Methodology
      Abdelrhman Meero
    • Visualization
      Abdelrhman Meero
    • Resources
      Ahmed Rashad Amin
    • Validation
      Ahmed Rashad Amin