The global technology development has made rapid changes and revolution on the financial services landscape that enforce most banking system including Islamic banks to be more innovative and digitalized. In relation to the technology growth, Islamic banks are now collaborating with Financial Technology (FinTech) companies to grow their market shares. Through critical review of the literatures, we highlight that the inclusion of FinTech may provide important avenues for the Islamic banking industry to offer more innovative financial technology products while being conscious on the morality and Shariah compliant aspects. Besides the beneficial impact and value creation on the application of technology system and information, we also critically highlight several issues on financial risk associated from the technology development and Shariah compliance. We also highlight that it is crucial role for Shariah boards to have the necessary knowledge and skills and to be active with the management of Islamic banks in developing new financial technology products.
Accenture. (2016). Fintech and the evolving landscape: landing points for the industry. Available at: fintechinnovationlab.com/wp-content/.../05/Fintech_Evolving_Landscape_2016.pdf
Ahmed, H. (2011). Maqasid al-Shari'ah and Islamic financial products: A framework for assessment. ISRA International Journal of Islamic Finance, Vol. 3(1), pp. 149-160.
Ajili, H., and Bouri, A. (2018). Corporate governance quality of Islamic banks: Measurement and effect on financial performance. International Journal of Islamic and Middle Eastern Finance and Management, Vol. 11(3), pp.470-487.
Allen, F., and Carletti, E. (2006). Credit risk transfer and contagion. Journal of Monetary Economics, Vol. 53, pp. 89-111
Almutairi, A. R., and Quttainah, M. A. (2017). Corporate governance: Evidence from Islamic banks. Social Responsibility Journal, Vol. 13(3), pp. 601-624
Alt, R., and Sachse, S. (2012). Banking innovation. In: Gramlich L, Gluchowski P, Horsch A et al (eds) Gabler Bank-Lexikon, 14th edn. Springer Gabler, Wiesbaden, pp 161–162.
Angelakopoulos, G., and Mihiotis, A. (2011).E-banking: challenges and opportunities in the Greek banking sector. Electronic Commerce Research, Vol. 11(3), pp. 297–319.
Archer, S., Karim, R. A. A., and Al-Deehani, T. (1998). Financial contracting, governance structures, and the accounting regulation of Islamic banks: An analysis in terms of agency theory and transaction cost economics. Journal of Management and Governance, Vol. 2, pp. 149-170.
Avergun, J., and Kukowski, C. (2016), “Complying with AML Laws: challenges for the Fintech Industry”, Available at: www.crowdfundinsider.com/2016/04/83845-complying-with-aml-lawschallenges-for-the-Fintech-industry/ (accessed 21 November 2016).
Banaga, A., Ray, G. H., and Tomkins, C. (1994).External audit and corporate governance in Islamic banks: A joint practitioner-academic research study. Aldershot, Avebury.
BCBS. (2017). Sound Practices: Implications of Fintech Developments for Banks and Bank Supervisors. Basel Committee on Banking Supervision.
Belal, A. R., Abdelsalam, O., and Nizamee, S. S. (2015). Ethical reporting in Islamic bank Bangladesh limited (1983-2010). Journal of Business Ethics, Vol. 129, pp. 766-784.
Berger, A.N., Frame, W. S., and Miller, N. (2005). Credit scoring and the availability, price, and risk of small business credit. Journal of Money, Credit, and Banking, Vol. 37(2), pp. 191-222.
BNM. (2016). Financial Stability and Payment Systems Report 2016. Bank Negara Malaysia.
Briston, R., and El-Ashker, A. (1986). Religious audit: Could it happen here? Accountancy, 98 (1118), 120.
Chen, D., and Han, C. (2012). A comparative study of online P2P lending in the USA and China. Journal of Internet Banking and Commerce, Vol. 17(2), pp. 1-15.
Dusuki, A. W. (2008). Understanding the objectives of Islamic banking: A survey of stakeholders’ perspectives. International Journal of Islamic and Middle Eastern Finance and Management, Vol. 1(2), pp. 132-148.
El Hawary, D., Grais, W., and Iqbal, Z. (2004). Regulating Islamic financial institutions: The nature of the regulated. World Bank Policy Research Working Paper.
Evans, C. W. (2015). Bitcoin in Islamic Banking and Finance. Journal of Islamic Banking and Finance, Vol. 3, No. 1, pp. 1-11
Farook, S., Hassan, M. K., and Lanis, R. (2011). Determinants of corporate social responsibility disclosure: The case of Islamic banks, Journal of Islamic Accounting and Business Research, Vol. 2(2), pp.114-141.
Frame, W. S., and White, L. J. (2014). Technological change, financial innovation, and diffusion in banking. SSRN Electronic Journal.
Frame, W. S., Srinivasan, A., and Woosley, L. (2001). The effect of credit scoring on small business lending. Journal of Money, Credit, and Banking, Vol. 33(3), pp. 813-825.
Gambling, T., Karim, R. A. A., and Jones, R. (1993). Creditable organizations: Self regulation v. external standard setting in Islamic banks and British charities. Financial Accountability and Management,Vol. 9(3), pp. 195-207.
Garas, S. N., and Pierce, C. (2010). Shari’a supervision of Islamic financial institutions. Journal of Financial Regulation and Compliance, Vol. 18(4), pp. 386-407.
Ghayad, R. (2008). Corporate governance and the global performance of Islamic banks. Humanomics, Vol. 24(3), pp. 207-216.
Ginena, K. (2014). Shariah risk and corporate governance of Islamic banks. Corporate Governance: The International Journal of Business in Society, Vol. 14(1), pp. 86-103.
Gomber, P., Koch, J., and Siering, M. (2017). Digital Finance and FinTech: Current research and future research directions. Journal of Business Economics, Vol. 87, pp. 537-580.
Grais, W., and Pellegrini, M. (2006a). Corporate Governance in Institutions Offering Islamic Financial Services – Issues and Options. World Bank Policy Research Working Paper 4051.
Haddad, C., and Hornuf, L. (2016). The emergence of the global fintech market: economic and technological determinants. University of Lille & University of Trier, CESifo Working Paper Series No. 6131, Lille & Trier.
Haniffa, R. M., and Hudaib, M. (2007). Exploring the ethical identity of Islamic banks via communication in annual reports. Journal of Business Ethics, Vol. 76(1), pp. 97-116.
Haridan, N. F. M., Hassan, A. F. S., and Karbhari, Y. (2018). Governance, religious assurance and Islamic banks: Do Shariah boards efectively serve?, Journal of Management and Governance.
Herzenstein, M., Sonenshein, S., and Dholakia, U. M. (2011). Tell me a good story and I may lend you money: The role of narratives in peer-to-peer lending decisions. Journal of Marketing Research, Vol. 48, pp. 138- 149.
IFSB. (2017). Islamic Financial Services Industry Stability Report 2017. Islamic Financial Service Board.
Iqbal, Z. (1997). Islamic financial systems. Finance & Development, Vol. 34(2), pp. 42-45.
Karim, R. A. A. (1990a). The independence of religious and external auditors: The case of Islamic banks. Accounting, Auditing & Accountability Journal, Vol. 3(3), pp. 34-44.
Karim, R. A. A. (1990b). Standard setting for the financial reporting of religious business organisations: The case of Islamic banks. Accounting & Business Research, Vol. 20(80), pp. 299- 305.
Khan, M. S., and Mirakhor, A. (1986). The framework and practices of Islamic banking. Finance Development 3(September), pp. 32-36.
Lee, I., and Shin, Y. J. (2018). Fintech: Ecosystem, business models, investment decisions, and challenges. Business Horizons, Vol. 61, pp. 35-46.
Lee, M.-C. (2009). Factors influencing the adoption of internet banking: An integration of TAM and TPB with perceived risk and perceived benefit. Electronic Commerce Research and Applications, Vol. 8(3), pp. 130–141.
Lerner, J., and Tufano, P. (2011). The consequences of financial innovation: A counterfactual research agenda. Annual Review of Financial Economics, Vol. 3(1), pp. 41-85.
Mahomed, Z., and Mohamad, S. (2016). Disruptors: Financial innovation and riding the fintech wave. Available at: www.inceif.org/archive/wp.../Bulletin-Vol.2-article-2.pdf
Miller, M. A. (2015), “Faster payments means faster fraud”, available at: www.Fintechbusiness.com/ blogs/89-faster-payments-means-faster-fraud (accessed 3 December 2016).
Muedini, F. (2018). The compatibility of cryptocurrencies and Islamic finance. European Journal of Islamic Finance, No. 10.
Najeeb, S. F., and Ibrahim, S. H. M. (2014). Professionalizing the role of Shariah auditors: How Malaysia can generate economic benefits. Pacific-Basin Finance Journal, Vol. 28, pp. 91-109.
Neifar, S., and Jarboui, A. (2017). Corporate governance and operational risk voluntary disclosure: Evidence from Islamic banks. Research in International Business and Finance.
Othman, R., and Ameer, R. (2015). Conceptualizing the duties and roles of auditors in Islamic financial institutions. Humanomics, Vol. 31(2), pp. 201-213.
Pikkarainen, T., Pikkarainen, K., Karjaluoto, H., & Pahnila, S. (2004). Consumer acceptance of online banking: An extension of the technology acceptance model. Internet Research, Vol. 14(3), pp. 224–235.
Pittaway, L., Robertson, M., Munir, K., Denyer, D., and Neely, A. (2004). Networking and innovation: a systematic review of the evidence. International Journal of Management Reviews, Vol. 5/6(3&4), pp. 137-168.
Puschmann, T. (2017). Fintech. Business & Information Systems Engineering, Vol. 59(1), pp. 69-76.
Saretto, A., and Tookes, H. E. (2013). Corporate leverage, debt maturity and credit supply: The role of credit default swaps. Review of Financial Studies, Vol. 26, pp. 1190-1247.
Tomkins, C., and Karim, R. A. A. (1987). The Shari'ah and its implications for Islamic financial analysis: An opportunity to study interactions among society, organization, and accounting. The American Journal of Islamic Social Sciences, Vol. 4(1), pp. 101-115.
Ullah, S., Harwood, I. A., and Jamali, D. (2016). ‘Fatwa repositioning’: The hidden struggle for Shari’a compliance within Islamic financial institutions. Journal of Business Ethics, pp. 1-23.
Wang, T., and Hsu, C. (2013). Board composition and operational risk events of financial institutions. Journal of Banking and Finance, Vol. 37, pp. 2042-2051.
Xue, M., Hitt, L. M., & Chen, P. (2011). Determinants and Outcomes of Internet Banking Adoption. Management Science, Vol. 57(2), pp. 291–307.
Zaher, T. S., and Hassan, M. K. (2001). A comparative literature survey of Islamic finance and banking. Financial Markets, Institutions & Instruments, Vol. 10(4), pp.155-199.
In-Text Citation: (Haridan et al., 2020)
To Cite this Article: Haridan, N. M., Hassan, A. F. S., & Alahmadi, H. A. (2020). Financial Technology Inclusion in Islamic Banks: Implication on Shariah Compliance Assurance. International Journal of Academic Research in Business and Social Sciences, 10(14), 34–43.
Copyright: © 2020 The Author(s)
Published by Knowledge Words Publications (www.kwpublications.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
