Why Islamic Fintech Has Not Yet Become the Public's Primary Choice
The acceleration of digital technology has revolutionised the contemporary financial landscape. Through handheld devices, transactional activities, funding, and investments can now be accessed without the constraints of space and time. Ironically, amidst this digital ecosystem leap, sharia-based financial technology (fintech) platforms have yet to dominate the domestic market. This is a contradictory reality for Indonesia, the country with the world’s largest Muslim population.
The fundamental issue of stagnant adoption lies in the gap between principle and practice. Fundamentally, sharia fintech integrates technological practicality with the principles of Islamic economic justice, such as the elimination of usury (riba), speculation (maysir), and ambiguity (gharar). Ideally, these normative values should be a strong magnet for consumers. However, field performance shows a wide adoption gap compared to conventional variants due to several crucial factors:
Firstly, minimal public understanding. The root problem lies in low sharia financial literacy. The public often equates the two systems, viewing the ‘sharia’ label merely as linguistic cosmetics or Arabic formalities. In reality, the main distinction lies in the validity of the contract (akad), fund governance, and the rigidity of sharia supervisory oversight.
Secondly, limited service options. The diversification of sharia fintech products tends to lag behind. While conventional platforms have developed super-app ecosystems—integrating payments, loans, insurance, and investments in one gateway—the limited variety of sharia products forces consumers to switch to more accommodating platforms for their comprehensive needs.
Thirdly, a crisis of trust. Negative public sentiment due to the rampant cases of illegal online loans indirectly impacts the image of the entire industry. Although legal sharia fintech operates under a strict legal umbrella and the supervision of the National Sharia Board of the Indonesian Ulema Council (DSN-MUI), public resistance due to digital ecosystem trauma remains a stumbling block.
Industry players can no longer rely solely on religious sentiment or ‘label selling’. In the era of tight digital competition, responsive user experience (UX), system security, and service efficiency are the main determinants of business sustainability. Bureaucratic application procedures or system failures will easily cause users to migrate to more practical competitors.
On the other hand, this technological acceleration demands agility from the Financial Services Authority (OJK) in formulating regulations. Adaptive policies are needed to accommodate product innovation without compromising sharia compliance and consumer protection rights.
The expansion opportunities for sharia fintech in Indonesia are actually wide open, driven by the demographic bonus of internet penetration and the massive number of micro, small, and medium enterprises (MSMEs) that remain unbanked. Sharia fintech has significant potential to become a driving force for financial inclusion for these micro-entrepreneurs.
However, to convert this potential into reality, cross-sector synergy is non-negotiable. Regulators and the government must aggressively and continuously promote sharia financial literacy. Industry players need to be aggressive in conducting technological research to deliver competitive and secure products. Meanwhile, academics and higher education institutions play a crucial role in bridging scientific research with practical implementation in society to build an inclusive ecosystem.
The real challenge for sharia fintech is not merely winning the numbers game against conventional systems, but rather eroding public scepticism through concrete education and innovation. When technological ease can align harmoniously with sharia justice values, this platform will no longer be a secondary choice, but a primary pillar towards a just and sustainable economic order.