Integrating Artificial Intelligence into Islamic Finance: Opportunities and Challenges
DOI:
https://doi.org/10.32890/ijib2026.11.2.3Keywords:
Islamic Finance, Shariah Compliance, Financial Technology, Artificial Intelligence, Systematic Literature ReviewAbstract
The paper critically assesses the application of Artificial Intelligence (AI) in Islamic finance, highlighting the possible benefits that the adoption of AI can bring and the challenges posed by Shariah and ethical governance. This paper adopts the Systematic Literature Review (SLR) approach based on PRISMA 2020 protocol. An exhaustive literature search of Scopus, Google Scholar, and JSTOR databases for academic papers written during the years 2013–2024 identified 487 papers initially. After a thorough selection process, 59 papers were retained in the study. While the incorporation of AI into Islamic finance has enormous benefits for the operations of Islamic financial institutions such as risk management and credit scoring, customer relationship improvement using AI-based interfaces, fraud detection, and regulatory compliance, its success requires overcoming some critical challenges associated with algorithmic transparency, data privacy, algorithmic bias, and Shariah governance frameworks. Therefore, this study develops an integrated framework of responsible AI adoption. This study will be beneficial for policymakers and Islamic financial institutions. The present study adds value to existing literature through a robust and methodically grounded review of existing literature, along with the introduction of a complete framework for governance. This would help to fill an important gap between AI technology and Islamic jurisprudence.
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