FinTech application in Islamic social finance in Asia region: a systematic literature review

• Date: 02 July 2024
• Pages: 213-237
• DOI: https://doi.org/10.1108/IJOES-07-2023-0155
• Published date: 02 July 2024
• Subject Matter: Economics,Social economics
• Author: Balkis Kasmon,Siti Sara Ibrahim,Dalila Daud,Raja Rizal Iskandar Raja Hisham,Sucihatiningsih Dian Wisika Prajanti

FinTech application in Islamic

social f‌inance in Asia region: a

systematic literature review

Balkis Kasmon

Faculty of Business Management, Universiti Teknologi MARA,

Cawangan Negeri Sembilan, Dungun, Malaysia

Siti Sara Ibrahim

Faculty of Business Management, Universiti Teknologi MARA,

Cawangan Negeri Sembilan, Dungun, Malaysia and Institute forBig Data Analytics

and Artif‌icial Intelligence, Universiti Teknologi MARA, Dungun, Malaysia

Dalila Daud

Faculty of Accountancy, Universiti Teknologi MARA, Cawangan Negeri Sembilan,

Dungun, Malaysia and Accounting Research Institute (ARI),

Universiti Teknologi MARA, Dungun, Malaysia

Raja Rizal Iskandar Raja Hisham

College of Business, Universiti Utara Malaysia, Sintok, Malaysia, and

Sucihatiningsih Dian Wisika Prajanti

Department of Economic Development, Faculty of Economics,

Universitas Negeri Semarang, Semarang, Indonesia

Abstract

Purpose –This study aims to analyse the existing literature on the utilisation of f‌inancial technology (FinTech) in

the Islamic social f‌inance (ISF) sector, focusing on tools, applications and benef‌its. From this study, it is to provide

insights for literature or for practitioners on how FinTech can be used in ISF, suc h as using blockchain (tools) in waqf

(application) that can help to enhance transparency and trust (benef‌its) with donors. It is important to explore new

available tools or applications in ISF markets so that such effort can benef‌it the industry in promoting its growth.

Design/methodology/approach –A systematicliterature review (SLR) was carried outusing Reporting

Standards for Systematic EvidenceSyntheses (ROSES) which has been based on quality evaluation criteria,

beginning with 41,945 entriesin Scopus, 25,386 entries in the Web of Science and 1,590 entries in the Google

Scholar databasesand ending with 35 articles from data abstraction and analysis, all of which focus on tools,

applicationsand benef‌its of FinTech in ISF sector.

Findings –This review yielded three primarythemes and eleven sub-themes addressing FinTech, namely

applications (foursub-themes: crowdfunding, blockchain, bankingservice and peer-to-peer (P2P), tools (three

sub-themes: waqf, zakat and sadaqah), as well as benef‌its (four sub-themes: transparency, innovation,

inclusivenessand eff‌iciency).

Research limitations/implications –This study emphasises on innovative application of FinTech used in

ISF industry which focuses on applications, tools and benef‌its of FinTech to the industry. However, the f‌indings

indicate that there is plenty of room for future investigation. The current work outlines several methodological

This paper is funded by Fundamental Research Grant: FRGS/1/2021/SS01/UIT M/02/12. The authors would

like to thank Universiti Teknologi MARA, the Ministry of Higher Education of M alaysia and the anonymous

participants for their cooperation and time in providing the researcher with all the needed information.

A systematic

literature

review

213

Received14 July 2023

Revised24 November 2023

2April 2024

Accepted21 April 2024

InternationalJournal of Ethics and

Systems

Vol.41 No. 1, 2025

pp. 213-237

© Emerald Publishing Limited

2514-9369

DOI 10.1108/IJOES-07-2023-0155

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/2514-9369.htm

issues and concerns as well as provides recommendations for future research. Various challenges associated with

FinTech applications include inadequate regulations, complex permit application procedures, misu seo fF inTech for

terrorist f‌inancing, the existence of fraudulent FinTech companies and consumer disputes in the FinTech s ector

concerning ISF. There are few in-depth studies on the possible use of FinTech models in ISF, compared to studies

focusing on upcoming challenges. This study also highlights the methodological limitations in pre vious research

efforts, which can be used to improvefuture studies in this area. To offer a more comprehensive analysis, additional

search keywords and enginesthat have not been included in this study could be used in future investigationswith

different methodologies.

Practical implications –For practitioners, the paper has signif‌icant managerial consequences. The

analysis provides insights into real-life opportunities, limits and solutions for improving performance

management by looking at FinTech applications from a larger and more diverse perspective. The

practitioners, especially the State Islamic Religious Council, can recognise the benef‌its of using FinTech

technologyin ISF (waqf, zakat and sadaqah), namely under their jurisdiction.

Originality/value –This systematic literatureassessment identif‌ies critical knowledgegaps that must be

addressed such as the applications of FinTech that are still ambiguous, with certain applications not

completely embraced in the ISF industry. This study uses SLR technique to categorise literature, identify

gaps in current studies and providerecommendations for the research issue (Paul and Criado, 2020), instead

of using the other previous methodology such as content analysis or qualitative review. Hence, FinTech is

consideredan innovative or new approach in ISF industry.

Keywords Financial technology (FinTech), Islamic social f‌inance (ISF), Crowdfunding,

Peer-to-peer, Banking service, Blockchain,

Paper type Literature review

1. Introduction

Islamic f‌inancialinstitutions (IFIs) in adhering to the principles based on ethics and morality

play an important role in economic development, as they did during the f‌inancial crisis

recovery in 2008.The application used in IFIs canhelp the government manage the recovery

of the economy from crises, such as the recent COVID-19pandemic (Ascarya, 2021;Rabbani

et al.,2021;Umar et al., 2022). Digitalisation has been blooming since then, with f‌inance,

technology management and innovation management being combined in the f‌ield of

f‌inancial technology (FinTech; Ibrahim et al.,2022;Niswah and Legowati, 2019). Henceforth,

digitalisationis seen as a new agenda for supporting the establishment ofthe Islamic social

f‌inance (ISF)industry so that it can operatemore effectively and eff‌iciently.

Meanwhile, the application of FinTech has been embedded in most digitalisation agendas in

the ISF industry. FinTech systems have been adopted into e-waqf and philanthropic activities in

digitised crowdfunding and f‌inance (Hasanah and Pranata, 2019). However, the applications of

FinTech remain in a grey area, with some applications not fully accepted in the ISF industry

specif‌ically. Muryanto et al. (2021) discovered several issues related to FinTech applications, such

as insuff‌icient laws, diff‌icult permit application processes, misuse of FinTech to f‌inance

terrorism, the prevalence of illegitimate FinTech enterprises and consumer conf‌licts in the

FinTech industry related to ISF. There is a limited number of comprehensive analyses on the

potential application of FinTech models in ISF, as opposed to analyses on future challenges.

Therefore, this study aimsto analyse the existing literature on the application of FinTech

in ISF. This analysis study focuseson the tools, applications and benef‌its of FinTech in the

ISF industry. The analysis was conducted using systematic literature review (SLR), being

guided by Reporting Standardfor Systematic Evidence Syntheses (ROSES). A thoroughand

transparent systematic reviewhas been conducted at every stage of the process, allowing it

to be replicated and updated(Kerres et al., 2020;Clarke, 2011). The result from the analysis is

discussed focusing on the main themes and sub-themes. There are several keywords

(Fintech, Islamic f‌inance, IslamicFintech, Crowdfunding, blockchain, banking service) used

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