Emergence of Financial Technology in Islamic Banking Industry and Its Influence on Bank Performance in Covid-19 Scenario: A Case of Developing Economy

Abstract

Technological intervention and financial innovation are an essential element for the banking sector especially in post-Covid 19 scenario. Islamic banking industry has also no exception and Islamic banks could attain institutional objectives over financial technology. The motivation behind research is to investigate emergence of financial technology in Islamic Banking Industry and its Influence on Bank Performance. The population of the study consists of Islamic banks and windows of Islamic banks operating in Pakistan. The sample size consists of four Islamic banks, five Islamic windows of conventional banks, and State bank of Pakistan. Purposive sampling technique was used by researcher. Semi-structured interviews were conducted and NVIVO software was used for data analysis. Findings indicate that technologies used by different banks to serve the customer are blockchain, mobile banking, customer relations management, cyber security, cloud banking, and fintech start-up. Reaction and response of the Islamic finance industry to the rise of financial technology and its impact on Pakistan is obvious.

Investigating the Role of Financial Innovation on Islamic Financial Institutions Performance During Covid-19

“…Rresearcher used simple random sampling for collecting of data from the managerial staff of IFIs selected part of Pakistan as such type of sampling technique was advised by the previous researchers for such types of studies (Singh & Singh, 2015). The researchers adopted questioner from past literature (Ahmad, Sohail, & Nawaz, 2021;Sohail & Nwaz, 2021). Questioner was used to collect data from 316 survey respondents.…”

“…Financial innovation (FI) is necessary to ensure stability of Islamic financial institutions during COVID-19 outbreak. The recent COVID-19 epidemic has caused havoc on every facet of human life, prompting a global race among experts and governments to devise the realistic strategy for mitigating the harm (Ahmad, Sohail & Nawaz, 2021). Despite pandemic impact on all economic sectors, global financial industry sustained most severe harm, culminating in an unsustainable burden as a result of the sector's direct and indirect influence on the human activities on a daily basis.…”

“…As a result, Islamic banking is a preferred option for these people since it adheres to Islamic financial regulations and provides them with salvation both now and in the future. Given the crucial role Islamic banks play in human wellbeing, it is only logical to emphasise their stability and growth (Ahmad, Sohail & Nawaz, 2021). As a result, the appropriate implementation of FI should be extensively evaluated to maintain Islamic banking stability.…”

Integration of Fintech and Islamic Banking in Indonesia: Opportunities and Challenges

“…The digital economy has emerged as the main actor in this modern economy (Ahmad et al, 2021), especially in Indonesia during the COVID-19 pandemic (Nurzianti, 2021). With technology, human activities get a lot of conveniences, including in the financial aspect (Tiyan et al, 2021).…”

“…Thus, Islamic banking in developing countries with Muslim majority populations such as Pakistan and Indonesia has a strong influence in supporting financial system stability, so the implementation of financial technology is strongly expected to play an active role in achieving every element of society, especially people in the 3T (Foremost, Outermost areas, and Remote) whereas the presence of banking branch offices is still not accessible (Ahmad et al, 2021). It is also supported by OJK, which is currently developing a financial technology system for use in services in the financial services industry, particularly banking service applications in Indonesia (Muchlis, 2018).…”