INCEIF: AI Cannot Replace Human Judgement in Islamic Finance

The Deputy President Research of the ISRA Institute at INCEIF University, Dr Marjan Muhammad, has stated that the development of artificial intelligence (AI) presents significant opportunities to strengthen the management of Islamic social finance. However, she emphasised that the use of such technology must continue to prioritise human judgement to ensure alignment with Shariah principles and ethics. “AI should strengthen human judgement, not replace it. Technology remains technology. AI must not override the human capacity for thought that Allah has bestowed upon us,” Marjan said at Menara Syariah PIK II, Tangerang, Banten, on Wednesday (5/8/2026). Marjan explained that AI can be utilised to improve the efficiency, transparency, and accountability of zakat and wakaf management. The technology can also help project fundraising potential, verify beneficiaries, improve distribution accuracy, and detect potential irregularities, making governance more effective. She noted that the opportunities for AI utilisation are vast, given that the combined global potential of zakat and wakaf is estimated to reach more than USD 1.2 trillion annually. “The opportunity is enormous because the combined potential of zakat and wakaf is estimated at over USD 1.2 trillion per year. Even a relatively small increase in efficiency can produce a significant social impact,” she said. Nevertheless, Marjan assessed that the implementation of AI cannot rely solely on technological advancement. Strengthening governance and inter-institutional coordination remains a primary challenge in the development of Islamic social finance. “The core of the problem is that most of these challenges actually lie in the governance of data, information, and coordination. This is where AI can provide real solutions,” she said. She also cautioned that to date, there is no comprehensive Shariah guidance on the use of AI, particularly in Islamic social finance. Therefore, the development of a governance framework must occur alongside the adoption of the technology. “To date, there is no comprehensive Shariah guidance on the use of AI, especially in the field of Islamic social finance. Therefore, the governance framework must be built alongside the adoption of the technology, not after the technology has been implemented,” Marjan stated. She said that collaboration between regulators, academics, technology providers, and Islamic social finance institutions is key to building an AI utilisation model that is transparent, accountable, and remains grounded in Shariah principles.