ARTIFICIAL INTELLIGENCE IN ISLAMIC FINANCE: AN OUTLOOK BASED ON MAQASID AL-SHARIAH

Abstract

The advancement of Artificial Intelligence (AI) has significantly influenced global financial systems, including the Islamic finance sector. AI technologies such as robo-advisors, RegTech, and automated Shariah screening systems have enhanced efficiency and decision-making. However, their application requires critical evaluation to ensure alignment with Islamic ethical and legal principles. Despite the growing adoption of AI in Islamic finance, limited studies have explored its implementation from the perspective of maqāṣid al-Sharī‘ah (objectives of Islamic law). The absence of a clear ethical and jurisprudential framework raises concerns such as transparency, algorithmic bias, and Shariah compliance. This study aims to analyse the application of AI in Islamic finance from the perspective of maqāṣid al-Sharī‘ah, and propose a maqāṣid-based strategy for AI operations in Islamic finance. This study employs a qualitative research design based on library and interpretive analysis of classical and contemporary Shariah texts, peer-reviewed academic literature, regulatory guidelines, and institutional governance frameworks related to Islamic finance and artificial intelligence. This study found that AI can support the realization of maqāṣid al-Sharī‘ah by promoting transparency, justice, and public welfare in Islamic finance operations. Applications such as AI-driven credit scoring, robo-advisory services, and compliance automation contribute to financial inclusion, equitable wealth distribution, and risk mitigation. Nonetheless, ethical challenges such as privacy violations, data misuse, and opacity in algorithmic decision-making must be carefully addressed to prevent contradictions with Shariah principles. This study contributes to the emerging discourse on ethical AI integration within Islamic finance by proposing a maqāṣid al-Sharī‘ah-based evaluative framework. It highlights the importance of developing Shariah-oriented AI governance and ethical policies to guide Islamic financial institutions and regulators. The findings provide a foundation for future empirical research and policy formulation aimed at harmonizing technological innovation with Islamic ethical objectives.