The Role of Financial Technology (Fintech) in Promoting Innovation in Islamic Financial Products

Abstract

This study aims to examine the role of financial technology (fintech) in driving innovation in Islamic financial products. The research addresses critical gaps in understanding how digital technologies can be strategically leveraged within the Islamic finance ecosystem to enhance product innovation, accessibility, and operational efficiency while maintaining rigorous sharia compliance. This study employs a qualitative research approach combining comprehensive literature review and case study analysis. Data collection involved systematic searches of academic databases (JSTOR, ProQuest, Google Scholar), industry reports from OJK and KPMG, and Islamic finance publications. The research covers the period 2014-2024, with particular emphasis on the Indonesian fintech and Islamic finance landscape. Findings conclusively demonstrate that fintech possesses significant potential to enhance innovation in Islamic financial products through strategic application of blockchain, artificial intelligence (AI), and mobile banking platforms. These technologies facilitate development of new sharia-compliant financial instruments, substantially improve operational efficiency, extend financial services to previously underserved populations, and strengthen sharia compliance verification processes. This research contributes a comprehensive assessment of fintech-Islamic finance integration by providing systematic analysis of multiple innovation mechanisms (Digital Investment Solutions, Digital Banking, Sharia Compliance Automation), identifying concrete case study examples from the Indonesian market, and offering actionable recommendations.