PETALING JAYA: Islamic banks are increasingly turning to financial technology (fintech) solutions to modernise their offerings and better serve the evolving needs of their customers.
Silverlake Axis CEO and Islamic banking head Othman Abdullah expressed optimism that the strategic integration of cutting-edge fintech will be pivotal in shaping the future of Islamic finance.
“Definitely, we will see more digital services emerging and transforming the way Islamic banks operate and interact with customers,” he said in an exclusive interview with SunBiz.
Othman highlighted use cases where some Islamic banks, such as those in Saudi Arabia, have already launched their own digital banking capabilities.
He noted that a key area of focus for Islamic banks now is open banking, which enables the sharing of customer data with third-party service providers. “We will see much better user experience, good digital experience, leveraging all the latest technology.”
Othman emphasised the importance of artificial intelligence (AI) and machine learning in the banking sector.
“Generative AI is set to revolutionise various aspects of the banking industry, from personalised product recommendations to customer support solutions. We will likely see these advancements implemented very soon, and I believe they will significantly enhance user experiences and efficiency,” he said.
However, he noted that Islamic banks face unique challenges in their digital transformation journeys, which are technology, syariah compliance, talent acquisition and funding.
“When discussing technology challenges, one of the most common issues raised in the banking sector is legacy infrastructure,” Othman said, adding that keeping pace with the rapid advancements in technology remains a signi-ficant hurdle.
He noted that syariah compliance is a critical consideration for Islamic banks as they adopt new digital solutions. “They have to make sure that whatever products and services are syariah compliant, continue to be compliant,” he stressed.
To navigate these obstacles, Othman suggested that Islamic banks need to combine strong syariah governance with robust technology governance.
Additionally, he said the growing popularity of blockchain technology is a game changer for Islamic banking, mentioning how blockchain could be used to ensure transparency in financial transactions, especially for areas such as zakat (almsgiving) and waqf (charitable endowments).
“With blockchain, every transaction can be recorded in a secure, immutable way, providing greater trust and confidence in Islamic financial products,” he said, adding that this could not only enhance operational efficiency but also attract younger, tech-savvy customers seeking ethical and transparent banking solutions.
Othman predicted a rise in fintech part-nerships within the Islamic banking ecosystem. By collaborating with fintech startups, Islamic banks can leverage innovative platforms to develop syariah-compliant investment products and micro-financing tools tailored for underserved communities.
“These collaborations will bridge the gap between tradition and modernity, enabling Islamic banks to remain relevant in a competitive digital landscape.”
The future of Islamic banking lies in its ability to seamlessly integrate ethical values with technological advancements, Othman said.
