Integrating Financial Technology into Islamic Social Finance: Ethical Alignment, Institutional Adaptation, and Strategic Transformation

Abstract

The contemporary evolution of financial technology (fintech) has introduced significant innovation across global financial systems, yet its integration into Islamic social finance remains underdeveloped. Islamic social finance instruments such as zakāt, waqf, and ṣadaqah are deeply rooted in ethical principles and communal welfare, requiring deliberate alignment with evolving digital infrastructures. The convergence of fintech and Islamic social finance presents both opportunities and ethical dilemmas that warrant scholarly examination. This study aims to investigate the ethical alignment, institutional adaptation, and strategic transformation required for the effective incorporation of fintech into Islamic social finance. It explores how Islamic values can guide technological innovation while ensuring that digital platforms enhance, rather than compromise, the objectives of sharī‘ah. Using qualitative content analysis and grounded theory methods, the study analyzes data from institutional reports, interviews with Islamic finance practitioners, and case studies from Indonesia, Malaysia, and the Gulf region. Key findings suggest that ethical consistency with maqāṣid al-sharī‘ah, institutional agility in governance, and strategic platform development are essential for successful integration. The findings contribute to both academic and policy discourses by offering a framework that harmonizes digital finance innovations with classical Islamic jurisprudence and community-centered financial ethics. This research provides theoretical insights and practical recommendations for policymakers, Islamic financial institutions, and fintech developers aiming to operationalize digital Islamic social finance effectively.