Evaluating Sharia Compliance in the Validity of AI-Driven Digital Financial Products in Islamic Banking

Abstract

The development of digital technology and artificial intelligence (AI) has driven innovation in the banking sector, including Islamic banking. Digital transformation provides easy access and efficiency of services, but raises new challenges related to compliance with Islamic principles. This study aims to analyze Islamic compliance with AI-based Islamic banking digital products using a normative legal approach. This approach includes a review of national regulations and applicable Islamic legal principles. The results of the study show that Indonesia already has a sufficient legal basis for digital banking through OJK regulations, and is supported by progressive fatwas from the National Sharia Council-MUI (DSN-MUI) regarding products such as Islamic electronic money, Islamic fintech lending, and Islamic crowdfunding, which are declared permissible as long as they comply with Islamic principles. However, there are still challenges because not all DSN-MUI fatwas are effectively integrated into the technical regulations of the financial authorities. The use of AI in Islamic banking has the potential to increase the efficiency and accuracy of compliance with Islamic principles, such as in the detection of usury and gharar, but also raises ethical issues such as algorithmic bias, transparency, data privacy, and the requirement for customer consent. In conclusion, the validity of Islamic digital products is highly dependent on compliance with formalized Islamic principles. Harmonization between technological innovation and the Islamic legal framework is needed, including accelerating special regulations, strengthening the supervisory role of the DPS, and preparing AI ethical guidelines for Islamic financial institutions.