Siti Umi Nurbaidah

Indonesian Islamic Banking and Finance: Responding to Digital Disruption Through Maqosid Integration and Product Innovation

Introduction

Indonesian islamic banking and finance: responding to digital disruption through maqosid integration and product innovation. Indonesian Islamic banking navigates digital disruption from fintech & crypto. Discover strategies integrating Maqosid al Syari'ah & product innovation for sustainable growth & sharia compliance. Essential for regulations & fatwas.

Abstract

Indonesian Islamic banking and finance face major challenges amid digital disruption driven by fintech, blockchain, open banking, and crypto assets. These rapid developments create opportunities for financial inclusion and product innovation but also introduce risks of sharianon-compliance, weak regulation, and declining public trust. This study explores Islamic banking strategies in responding to these challenges through the integration of maqosid al syari'ah product innovation, while recommending therenewal of OJK regulations and DSN-MUI fatwas. Using a qualitative approach with SWOT analysis on academic literature, regulatory reports, and shariafatwas, this research identifies that the main strength of Islamic banking lies in its sharialegitimacy and support from the Muslim community. However, weaknesses persist in low shariadigital literacy and regulatory lag. Opportunities arise from blockchain technology, digital payments, and hybrid instruments like digital sukuk, whereas threats emerge from conventional fintech competition and shariareputation risks. Integrating maqosid al syari'ah strengthens digital product innovation through principles of property protection (hifz al-mal), intellectual protection (hifz al-mal), and life protection (hifz al-mal). The findings highlight the need for maqosid based, technology-adaptive regulations and responsive shariafatwasto ensure compliance and innovation. Consequently, Indonesian Islamic banking can sustain growth, enhance competitiveness, and strategically navigate the evolving digital landscape.

Review

This paper addresses a highly pertinent and timely subject concerning the strategic response of Indonesian Islamic banking and finance to the pervasive challenges and opportunities presented by digital disruption. The abstract effectively outlines the core dilemma – navigating rapid technological advancements like fintech, blockchain, and crypto assets while upholding sharia compliance and public trust. The proposed approach, centered on integrating *maqasid al-shari'ah* with product innovation, offers a conceptually robust framework for ensuring sustainable growth and competitiveness. Overall, the study promises to be a valuable contribution to the discourse on the future trajectory of Islamic financial institutions in an increasingly digitized world. The strength of this research lies in its clear problem articulation and the judicious application of a qualitative approach, employing SWOT analysis across academic literature, regulatory reports, and sharia fatwas. The identified strengths (sharia legitimacy, community support) and weaknesses (low digital literacy, regulatory lag) provide a solid diagnostic foundation. Furthermore, the recognition of opportunities such as blockchain technology and digital sukuk, alongside threats from conventional fintech and reputational risks, paints a comprehensive picture of the landscape. The paper's emphasis on renewing OJK regulations and DSN-MUI fatwas through a *maqasid*-based, technology-adaptive lens is a particularly insightful and actionable recommendation, demonstrating a practical orientation that transcends theoretical discussion. While the abstract clearly articulates the importance of *maqasid* integration, the description of its application could benefit from greater precision. Specifically, the abstract states "property protection (hifz al-mal), intellectual protection (hifz al-mal), and life protection (hifz al-mal)." It is important to note that intellectual protection is typically aligned with *hifz al-aql* (protection of intellect) or even *hifz al-nasl* (protection of progeny/generation through education and knowledge), and life protection with *hifz al-nafs* (protection of life). Clarifying these distinctions in the full paper would significantly enhance the scholarly rigor and practical applicability of the *maqasid* framework. Nevertheless, the paper's overarching goal of enabling Indonesian Islamic banking to strategically navigate the evolving digital landscape remains highly commendable and of significant practical importance.

Full Text

Comments

You need to be logged in to post a comment.