المنصة الرقمنة

الخلاصة

This exploratory working paper investigates the activities relating to the digital transformation process of Islamic banks (IBs). Data elicited via a survey questionnaire from 80 IBs across 21 Islamic Financial Services Board member jurisdictions were subjected to descriptive analysis to investigate the IBs’ rationales for digitalisation, as well as their current status and the technologies they have adopted. The paper also investigates the regulatory approaches, challenges, prudential risks, and financial stability implications of the digitalisation of Islamic banking. The paper found that in most IBs the digitalisation process is still in progress but has gained more traction since the outbreak of the COVID-19 pandemic. Among many other pertinent reasons cited in the paper, strengthening competitiveness, enhancing operational efficiency, and improving customer satisfaction are the main rationales for IBs’ digitalisation drive. The technologies adopted include mobile and digital wallets, biometric authentication, and artificial programming interface. Notwithstanding, IBs’ digitalisation drive has been impeded by legacy infrastructure, and by the lack of both the requisite human resources and open banking infrastructure and architecture. The paper examines the implications of the benefits and the risks of digitalisation for the stability of the Islamic banking industry and makes recommendations on the way forward