DIGITAL TRANSFORMATION STRATEGIES FOR ENHANCING ISLAMIC BANKING COMPETITIVENESS

Afif Badawi Badawi

Abstract


The rapid advancement of digital technologies presents both opportunities and challenges for Islamic banking institutions striving to maintain and enhance their competitiveness in an increasingly dynamic financial environment. Islamic banks often face unique hurdles, including the need to align digital innovations with Shariah principles while meeting customer expectations and regulatory demands. This study aims to explore effective digital transformation strategies that can strengthen the competitiveness of Islamic banks. Using a qualitative research approach, data were collected through semi-structured interviews with executives, digital strategy managers, and Shariah compliance officers from leading Islamic financial institutions in Indonesia. Thematic analysis was employed to identify key patterns and strategic approaches. The findings reveal that successful digital transformation in Islamic banks hinges on several factors: the integration of Shariah compliance into digital platforms, investment in customer-centric technologies, agile leadership, collaboration with fintech companies, and the establishment of robust cybersecurity systems. Moreover, the banks that excelled in digital adaptation demonstrated a strong commitment to innovation while upholding ethical values rooted in Islamic finance principles. Islamic banks must adopt a holistic and adaptive digital transformation strategy that not only focuses on technological advancement but also ensures alignment with Shariah values to achieve sustainable competitive advantage. Strategic recommendations include developing Shariah-compliant digital ecosystems, enhancing employee digital literacy, and fostering innovation through partnerships with Islamic fintech startups.

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DOI: https://doi.org/10.3059/insis.v0i0.29520

DOI (PDF): https://doi.org/10.3059/insis.v0i0.29520.g15083

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