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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

Is it permissible for a Muslim woman to leave her house adorned and without wearing her proper Islamic attire?

A Muslim woman isn't permitted to leave her house adorned and without wearing proper Islamic attire. And Allah Knows Best.

In life insurance with the Potash Company, enrollment is mandatory, and employees have the right to receive a cash amount from the insurance for surgeries and illnesses while employed by the company. Is the amount given by the insurance in this case permissible (Halal) or prohibited (Haram)?
 

Since the insurance is compulsory, then what the insurance company pays in return for medical treatment is similar to donation, and I pray to Allah The Almighty that this is lawful even if this service is deducted from your salary in return of it, so in this manner you take back some of the amount you paid in form of above treatment. And Allah Knows Best.

My mother inherited a share from my late father`s and brother`s property; however, the inheritance, a piece of land, wasn`t divided amongst the eligible heirs because it was hard to sell. While alive, she used say that she wanted these shares to be distributed amongst the poor and needy. What is the ruling of Sharia on this?

All perfect praise be to Allah, the Lord of the worlds, and may His Peace and Blessings be upon our Prophet Muhammad and upon all of his family and companions.
This is a will, so we have to consider the estate she had left behind. If the piece of land, which she had willed, equals one third and less of her estate, then the will must be executed. But, if it is more than one third, then one third must be executed and the rest of the estate, if the heirs agreed, is to be executed  as part of her will as well. However, if the heirs haven`t approved of that, then what remains, excluding that one third, must be divided amongst them according to the Islamic rules of inheritance. Moreover, we recommend that you pay a visit to the Iftaa` Department to make things clearer for you. And Allah The Almighty Knows Best.

Is it permissible for a person who had vowed to give a certain amount of money to another, but didn`t find the latter to donate that money to the mosque?

In principle, the vowing person should abide by his vow as much as possible. Therefore, if he couldn`t find the person that he had made the vow for, then the vow itself is countless and nothing is due on its maker. However, if the latter happens to find the former later on then, he has to give him that money.

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