Integrating Fintech in Malaysia’s Islamic Banking Sector: A Conceptual Study

This conceptual study explores the integration of financial technology (fintech) within Malaysia’s Islamic banking sector, focusing on its impact on operational efficiency, customer engagement, and adherence to Shariah principles. With rapid advancements in digital finance, Islamic banks in Malaysia are increasingly adopting fintech innovations—such as mobile banking, blockchain, and digital payment systems—to enhance service accessibility while upholding ethical standards. Through a review of relevant literature and key studies, this research highlights how fintech adoption improves both operational performance and customer satisfaction in compliance with Shariah principles. Findings indicate that fintech not only enhances efficiency but also promotes financial inclusion by providing underserved populations with Shariah-compliant financial services. Applying the Technology Acceptance Model (TAM) and Stakeholder Theory, the study underscores the role of user satisfaction and the importance of balancing technological innovation with ethical and regulatory considerations. The practical implications suggest that Islamic banks in Malaysia can leverage fintech to strengthen their competitive edge while aligning with regulatory frameworks that ensure Shariah compliance. However, the study is limited by its focus on Malaysia, suggesting the need for comparative analysis across regions with differing regulatory environments. Future research should investigate the long-term impact of fintech on financial stability in Islamic banking and examine fintech’s role in achieving global sustainability goals, particularly regarding Environmental, Social, and Governance (ESG) criteria. This study underscores the transformative potential of fintech in driving sustainable growth within the Islamic finance sector, positioning Malaysia’s Islamic banks as leaders in ethical and inclusive finance.