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The Role of Artificial Intelligence in Advancing Islamic Banking Operations
Author : Dr. Safwan Odaybat
Date Added : 03-01-2024

The Role of Artificial Intelligence in Advancing Islamic Banking Operations

 

All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.

 

One of the emerging topics for which seminars and conferences are held, and attracts researchers to study and explore its potential developments across various fields and disciplines is the subject of Artificial Intelligence. This topic elicits concerns about its potentially destructive impacts on one hand, while on the other hand, it raises hopes and expectations for significant positive effects on improving the quality of life and serving humanity.

 

Before delving into explaining the impact of Artificial Intelligence on Islamic banking, it is essential to clarify the meaning of Artificial Intelligence and Islamic banking:

 

Artificial Intelligence can be defined as a set of technologies and software aimed at enabling computer systems to perform tasks that are typically considered important for human intelligence and facilitate operations associated with specific tasks.

 

Artificial Intelligence relies on data and algorithms to achieve specific objectives. Its applications encompass a diverse range of fields such as machine learning, natural language processing, robotics manufacturing, medical diagnosis, risk management, and more.

 

Islamic banking can be defined as a financial system based on the principles of Islamic law (Sharia). This system requires abstaining from practices such as usury (interest), uncertainty or speculation (Gharar), and injustice. It encourages financing and investment in ways that are in tune with Islamic values and principles.

 

The role of artificial intelligence in advancing the operations and services of Islamic banking is highlighted through the following:

 

1-Enhancing Efficiency and Risk Management:

Artificial intelligence can contribute to the development of Islamic banking by improving its operational efficiency through enhancing analysis processes and risk management. One possible means to achieve this is by utilizing machine learning to enhance credit assessment, identifying potential loans with greater accuracy and efficiency. Additionally, artificial intelligence will contribute to boosting employee efficiency by selecting suitable development, training, and educational methods tailored to their needs.

 

2-Development of Innovative Financial Products:

Artificial intelligence enables Islamic banking to develop innovative financial products that align with the principles of Islamic Sharia. For example, smart investment solutions can be developed based on financial analytics and Sharia-compliant guidelines.

3-Enhancement of Customer Experience:

Artificial intelligence can improve customer experiences in Islamic banking by providing personalized financial services tailored to the specific needs of customers. It can offer accurate investment guidance that aligns with customers' goals without conflicting with Islamic values.

4-Combatting Money Laundering and Terrorism Financing:

Artificial intelligence can contribute to enhancing financial integrity through intelligent operations that develop and improve the quality of monitoring financial transactions. Consequently, it can uncover all illicit and internationally prohibited activities, including money laundering and terrorism financing.

 

5-Facilitating Compliance with Islamic Sharia:

Artificial intelligence contributes to the development of Islamic banking by achieving better compliance with the rules of Sharia. This can be accomplished by providing guidance to financial professionals or by enhancing financial audit and monitoring processes.

 

In conclusion, the topic of the impact of artificial intelligence on Islamic banking in general requires precise scientific studies and research to highlight both the positive aspects and potential challenges. While artificial intelligence may contribute to enhancing the efficiency of financial services and their compliance with Sharia, ethical considerations and Islamic values must be taken into account in the application of this modern technological advancement.

 

Article References:

1-Book: "Artificial Intelligence and Its Impact on the Economy and Islamic Banking" by Dr. Rafiq Ali Suleiman.

2-Book: "Islamic Banking and Artificial Intelligence Technology: Challenges and Opportunities" by Dr. Mohammed Al Nuaimi.

3-Research Paper: "Artificial Intelligence Technology and Its Impact on Islamic Financial Services" by Researcher Ahmed Abdullah Al Salman.

 

 

 

 

 

 

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Summarized Fatawaa

I prayed all the obligatory prayers in congregation, but after finishing the `Isha prayer, I remembered that I had forgotten to pray Dhuhr. What should I do, and is my prayer invalid?

Your prayers are valid, but you must make up the Dhuhr prayer as soon as you remember it, based on the saying of the Prophet (peace be upon him): "Whoever forgets a prayer must pray it as soon as they remember it; there is no expiation for it except this." [Muslim]. And Allah knows best

1- A young man whose father and grandfather are dead. Unfortuntly, he passedaway leaving a mother, two sisters and a brother. Do his paternal uncles inherit him? 2- A man died leaving daughters, a wife, brothers, a mother or no mother. It is well known that the daughters inherit two thirds and the wife one eighth. To whom does the rest of the estate go and what is the evidence on that from the texts of Sharia?

All perfect praise be to Allah, the Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad, sallallahu ‘alayhi wa sallam, is His slave and Messenger.
1- The full brother or the paternal half-sibling disinherits the paternal uncles. The paternal half-sibling takes one sixth and because they are from the Asabah (Male relatives on the father`s side) of the deceased they take the rest of the estate. The proof of this is that Ibn ‘Abbas (May Allah Be Pleased with them) reported God’s Messenger (PBUH) as saying: "Give the shares to those who are entitled to them, and what remains over goes to the nearest male heir." [Agreed upon]. In this case, nothing is left to them.
2- The brothers take the rest of the deceased`s estate and the full brother disinherits the paternal half-sibling, and the proof of this is the aforementioned narration. And Allah The Almighty Knows Best.

My father passed away, and he had life insurance with "Alico" for an amount of 12,500 dinars. He had paid premiums totaling 2,000 dinars. The insurance company paid us the insured amount. Should we take it, or is it considered forbidden (haram) money? And what should we do with it if it is forbidden?

You may take the amount your father paid to the company. The remaining amount is not yours. However, if you must take it, then accept it and donate it to the poor. And Allah Knows Best.

What is the Iddah period upon death of husband? What is the ruling when the woman observing Iddah after death of husband leaves her home to visit relatives although her Iddah hasn`t ended? What is the ruling on her wearing gold during Iddah period?

All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.
For a woman whose husband has died, the 'Iddah*  is four months and ten days after the death of her husband. If a woman is pregnant, the 'Iddah lasts until she gives birth. Moreover, she has to mourn, not wear gold, perfume nor saffron-colored garment. The evidence on this is that The Prophet (PBUH) said: "It is not lawful for a Muslim woman who believes in Allah and the Last Day to mourn for more than three days, except for her husband, for whom she should mourn for four months and ten days." [Agreed upon]. And Allah The Almighty Knows Best.
 
*The iddah is a waiting period that a Muslim woman observes after the death of her husband or after a divorce. The Quran says: For those men who die amongst you and leave behind wives, they (the wives) must confine themselves (spend iddah) for four months and ten days.

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