INCEIF: AI Cannot Replace Human Judgement in Islamic Finance

JAKARTA – Dr Marjan Muhammad, Deputy President of Research at ISRA Institute, INCEIF University, said the development of artificial intelligence (AI) presents major opportunities to strengthen the management of Islamic social finance. However, he said the use of the technology must continue to prioritise human judgement so that it remains aligned with sharia principles and ethics.

“AI should strengthen human judgement, not replace it. Technology is still technology. AI must not set aside the capacity for human 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 used to improve the efficiency, transparency and accountability of zakat and waqf management. The technology can also help project fundraising potential, verify beneficiaries, improve the accuracy of distribution, and detect potential irregularities, making governance more effective. According to him, the opportunity to utilise AI is growing given that the combined global potential of zakat and waqf is estimated at more than 1.2 trillion US dollars each year.

“The opportunity is enormous because the combined potential of zakat and waqf is estimated at more than 1.2 trillion US dollars per year. Even a relatively small improvement in efficiency can produce significant social impact,” he said.

Nevertheless, Marjan assessed that implementing AI cannot rely solely on technological advancement. Strengthening governance and coordination between institutions remains the main challenge in developing Islamic social finance.

“The core of the matter is that most of these challenges actually lie in the governance of data, information and coordination. This is precisely where AI can provide real solutions,” he said.

He also reminded that, to date, there is no comprehensive sharia guidance on the use of AI, particularly in Islamic social finance. Therefore, the drafting of a governance framework must be carried out alongside technology adoption.

“Until now there has been no comprehensive sharia guidance on the use of AI, especially in the field of Islamic social finance. Therefore, the governance framework must be built in step with technology adoption, not after the technology has been implemented,” Marjan said.

According to him, collaboration between regulators, academics, technology providers and Islamic social finance institutions is key to building the use of AI that is transparent, accountable and grounded in sharia principles.