Islamic Fintech Emerges as a Strategic Force in Post-Pandemic Economic Recovery
Dehradun, India – July 12, 2025
In a comprehensive study led by a team of international scholars, including Dr. Abu Bashar from IMS Unison University, currently affiliated with Gulf University, Bahrain, have spotlighted the transformative role of Islamic Financial Technology (Islamic Fintech) in mitigating the economic aftershocks of the COVID-19 pandemic. The peer-reviewed study, published in the Journal of Open Innovation, underscores Islamic Fintech as a socially inclusive and ethically grounded alternative to conventional financial systems.
Reimagining Recovery through Faith-Based Finance
As the global economy continues to reel from the long-lasting impacts of COVID-19, the study offers a timely intervention. It argues that the ethical and risk-sharing principles of Islamic finance, when merged with cutting-edge financial technology, offer a unique and sustainable model for economic resilience—especially in Muslim-majority nations and underserved communities.
“Islamic finance is not only ethical and inclusive; when integrated with Fintech, it becomes a powerful tool for socio-economic development,” said Dr. Bashar.
Three-Stage Recovery Model: A Blueprint for the Future
The paper proposes a three-stage model of post-COVID-19 recovery utilizing Islamic Fintech:
- Short-Term Emergency Relief
Tools like Zakat (mandatory almsgiving) and Qardh-al-Hasan (interest-free loans) can provide immediate financial aid to distressed populations and small businesses, efficiently distributed through AI-powered Fintech platforms.
- Medium-Term Recovery
Innovative financing solutions such as Sharia-compliant crowdfunding, P2P lending, and blockchain-based smart contracts can help micro-enterprises and SMEs revive operations in the 1–5 year transition period.
- Long-Term Resilience
Social finance instruments like Social Sukuk (Islamic bonds for welfare) and Awqaf (endowments) are seen as sustainable tools to build economic and social infrastructure over the long haul.
Technology Meets Theology
The research emphasizes that Fintech solutions—ranging from blockchain and artificial intelligence to RegTech and smart contracts—can enable Islamic finance institutions to enhance transparency, reduce operational friction, and better serve the financially excluded.
One highlight from the study is the concept of “IslamicFintech4SD”, a framework promoting alignment between Islamic principles and the UN Sustainable Development Goals (SDGs). It calls for collaboration between Islamic banks, startups, governments, and regulators to create a unified ecosystem of ethical innovation.
Beyond Religion: A Universal Model
While rooted in Islamic jurisprudence, the authors assert that the principles of Islamic Fintech—like fairness, risk-sharing, and ethical governance—resonate beyond religious boundaries. These principles offer a viable model for building resilient economies, especially in times of systemic shocks.
“The global financial system needs a moral compass,” said the authors. “Islamic Fintech is not just for Muslims—it’s a global, inclusive approach to finance that prioritizes people over profits.”
Policy Implications and the Road Ahead
The study carries significant implications for policymakers, financial regulators, and development agencies. It advocates for:
- Regulatory frameworks supportive of Islamic Fintech innovation
- Integration of AI and blockchain in social finance systems
- Strategic use of tools like Zakat and Social Sukuk in crisis response
The paper concludes with a call for continued research and the empirical testing of the proposed framework to guide future financial innovation grounded in ethics and inclusion.