Islamic Banking and Fintech Inclusion: Challenges, Opportunities and Role of Government in Pakistan

Abstract

Islamic banking in Pakistan faces a pivotal challenge to align its practices with modern
technological advancements while adhering to Shariah principles. This research explores the
integration of fintech within Islamic banking, examining its potential to enhance financial
inclusion, operational efficiency, and customer engagement. By analyzing successful Islamic
fintech models in countries like Malaysia and Indonesia, the study identifies key challenges such
as regulatory barriers, lack of public awareness, and inadequate infrastructure. The findings
highlight the critical role of government and financial institutions in fostering innovation through
policy reforms, public-private collaborations, and targeted educational campaigns. Ultimately, the
research proposes a strategic framework for leveraging fintech in Islamic banking to bridge
financial gaps and strengthen Pakistan's position as a leader in ethical finance.