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Trusting Innovation: How Sharia, Transparency, and Security Drive Islamic Fintech Adoption

In: Proceedings of the International Conference on Sustainable Economics and Finance in the Digital Business Transformation (INCOSEF 2025）

Author

Listed:
  • Nurfadilah Nurfadilah

    (State Islamic University of Palopo, Faculty of Islamic Economic and Business)

  • Nur Ariani Aqidah

    (State Islamic University of Palopo, Faculty of Islamic Economic and Business)

  • Hamida Hamida

    (State Islamic University of Palopo, Faculty of Islamic Economic and Business)

  • Muh Ginanjar

    (State Islamic University of Palopo, Faculty of Islamic Economic and Business)

  • Sukran Sukran

    (State Islamic University of Palopo, Faculty of Islamic Economic and Business)

Abstract

This study examines the determinants of Islamic fintech adoption intention in Indonesia by incorporating three main antecedents: sharia compliance, transparency, and security as well as the mediating roles of trust and perceived value. Using a survey method, data from 214 respondents were analyzed through SEM-PLS. The empirical results indicate that sharia compliance has a positive and significant effect on trust (H1) but does not influence perceived value (H2), suggesting that sharia compliance primarily functions as a source of legitimacy and ethical assurance rather than as a contributor to functional value. Transparency is found to have a positive effect on both trust (H3) and perceived value (H4), confirming that openness in information regarding contracts, fees, and data management forms the foundation of user trust and benefit perception. Meanwhile, security does not affect trust (H5), possibly due to a ceiling effect in users’ security perceptions, but it exerts a strong positive effect on perceived value (H6) by reducing perceived risk. Furthermore, perceived value significantly influences trust (H7) and adoption intention (H9), positioning it as a key driver of Islamic fintech usage. In contrast, trust does not have a direct effect on adoption intention (H8), indicating that usage decisions are driven more by functional benefits than by affective factors. Overall, this study underscores that increasing Islamic fintech adoption cannot rely solely on sharia legitimacy but must focus on creating tangible value through transparency, easily understood security features, and efficient user experience. Enhancing perceived value emerges as the most effective strategy to encourage adoption; therefore, service providers should design offerings that reduce risk and enhance utility. Regulators are also encouraged to strengthen sharia based transparency and disclosure standards to reinforce public trust and accelerate digital Islamic financial inclusion.

Suggested Citation

  • Nurfadilah Nurfadilah & Nur Ariani Aqidah & Hamida Hamida & Muh Ginanjar & Sukran Sukran, 2026. "Trusting Innovation: How Sharia, Transparency, and Security Drive Islamic Fintech Adoption," Advances in Economics, Business and Management Research, in: Xuan Vinh Vo & Thi Nha Truc Phan (ed.), Proceedings of the International Conference on Sustainable Economics and Finance in the Digital Business Transformation (INCOSEF 2025）, pages 464-485, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6239-624-1_35
    DOI: 10.2991/978-94-6239-624-1_35
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