“The Islamic finance industry is weary of having to force-wrap conventional structures into Sharia compliance just to be able to compete in the market. These technologies give us the opportunity to leapfrog such practices and develop Sharia-compliant native structures,”
Christoph Koster, CEO at UAE RuyaThe rise of digital platforms, AI, and agile methodologies offers Islamic financial institutions the chance to build Sharia-compliant products from scratch. Instead of mimicking and reworking conventional finance offerings, they can deliver products that match customer needs and meet Sharia standards for transparency, fairness, and ethics.
This Islamic-first approach embeds Sharia compliance early in product development, encourages innovation, speeds up the rollout of new offerings, enhances the customer experience by cutting wait times, and guides AI integration.
Christoph Koster, CEO at UAE Ruya was speaking at an online event that examined the growth of Islamic finance worldwide and how Islamic banks are using new technologies to meet rising demand for Sharia-compliant products.
Islamic Finance at the Forefront: Celebrating 50 Years and Leading the Way to the Future
The event was hosted by the new Qorus Islamic Finance Community. Among the key speakers were representatives of Kuwait Finance House in Bahrain, Reem Finance in the UAE, Saudi Arabia’s Bank Albilad, and Mashreq Pakistan. All these institutions are using digital technologies to deliver Sharia-compliant products and services.
Ruya, which was granted a banking license in the UAE last year, is employing digital platforms and tools to pioneer retail access to Sharia-compliant virtual assets such as cryptocurrencies. It is also developing financial applications that use tokenized assets.
“We’re seeing the bridging of two seemingly opposing worlds. On one side you have the world of cryptocurrencies with applications that are often very speculative. On the other, the world of Islamic finance which tends to be perceived as very traditional. But in the past 18 to 24 months Islamic financial institutions have begun embracing virtual assets because more and more customers are demanding access to that asset class,” says Koster.
"When Islamic institutions in the past relied on conventional banking systems and processes, Sharia compliance was often cascaded towards the end of product development. This frequently caused changes and delays,"
Tuncay Tuncer, Group Head of Digital Transformation at Kuwait Finance House in BahrainPioneering Sharia-compliant digital assets
Ruya has launched three initiatives to spearhead delivery of Sharia-compliant digital assets:
- In April 2025, Ruya became the first Islamic bank in the world to be granted regulatory approval to allow customers to buy and sell Sharia-compliant virtual assets, such as Bitcoin, on a mobile banking app. Ruya teamed up with digital asset infrastructure provider Fuze to deliver this service.
- Ruya is exploring the use of stablecoins to reduce costs and quicken delivery of cross-border remittances. It aims to link its debit cards to stablecoin wallets to enable such transactions.
- The fintech firm has begun building technology infrastructure that will link traditional banking systems with virtual asset providers and exchanges. The infrastructure will enable banks to offer their clients access to Sharia-compliant virtual assets.
"These initiatives are promoting financial inclusion, encouraging innovation, and giving customers confidence that the Islamic finance products they’re using are truly Sharia-compliant," says Koster.
Tuncay Tuncer, Group Head of Digital Transformation at Kuwait Finance House in Bahrain, adds that bringing Sharia compliance early into product development shortens lead times and encourages innovation.
“Historically there’s been a view that there's a cost to doing Islamic banking. And we've seen that. Profit payouts have been lower than conventional returns. We want to ensure that we give the best payouts on our Islamic savings accounts and communicate the message that ethical banking means doing right by clients and creating value for them.”
Shahzad Khokhar, Head of Islamic Banking at Mashreq PakistanAgile deliver cuts product cycles by 40%
“Agile delivery methodologies allow us to iterate validated Sharia early in the development process, not at the end. This gives us more flexibility and speed to pick up learnings and apply them to the product before it reaches customers.”
Kuwait Finance House cut product delivery cycles by 40% by introducing agile methodologies. The shift prompted teams across the organization to focus on value, not only cost, says Tuncer.
“Agility is a mindset that needs to be absorbed by the entire organization.”
Shahzad Khokhar, Head of Islamic Banking at Mashreq Pakistan, adds that his organization’s agile approach involves all stakeholders at the discovery stage of development and bakes Sharia compliance into products.
“This has been a big advantage because traditionally we've seen banks struggle with legacy systems, try to retrofit Islamic requirements, and come out with solutions that are less than optimal.”
Mashreq Pakistan is a digital Islamic bank launched in Pakistan this year by the UAE’s Mashreq financial services group. Pakistan has mandated that all banks in the country be Sharia-compliant by the end of 2027.
Khokhar sees considerable opportunity to improve the appeal of Islamic banking among customers in Pakistan.
Ahmed Darwish Elsayed, Head of Digital Delivery at Bank Albilad in Saudi Arabia, points out that Islamic finance aims to benefit not only the two parties in a transaction but also the wider community. He adds there is plenty of scope for the development of innovative Islamic finance products that don’t replicate conventional banking offerings but instead provide creative solutions to local financing needs.
“Interest in Islamic banking and financial services is growing not only in Muslim-majority countries but also in many other parts of the world. People are increasingly looking for ethical finance that’s not based on credit or interest but instead on Musharaka, participation in partnerships, or Murabaha (fixed cost) transactions.”
Much of the future innovation in Islamic finance is likely to be driven by the growing number of Islamic fintechs around the world
Mohamed Roushdy, Chief Information Officer at Reem Finance in the UAEDigital banking is giving way to intelligent banking
Tuncer at Kuwait Finance House says the global shift from digital banking to intelligent banking provides established Islamic banks with an opportunity to embed Sharia principles throughout their systems and processes. He points out that digital banking automated existing processes while intelligent banking uses real-time data to predict, adapt, and learn to deliver products that continually adjust to customer needs.
“Islamic banking is uniquely positioned because it has the ethics of financial fairness, transparency, and trust as its foundational principles. Agile methodologies allow Islamic banks to create intelligent banking products using delivery models that are flexible, transparent, and continuously aligned with the organization’s foundational principles," says Tuncer.
He adds that while agile delivery can propel Islamic banks to move quickly from digital banking to intelligent banking, the Islamic principles of Sharia will give them direction - and AI will define that direction.
“There are lots of ways AI can further the principles of Islamic banking, fair credit scoring, transparent zakat distribution, or intelligent stack pricing, for example.”
To ensure that AI applications are responsible and adhere to the principles of Islamic banking, organizations shouldn’t view them as discrete mechanical components, but instead manage them as agents that need oversight and, where necessary, correction just like employees, says Zubair Ahmed, Qorus MD for the Middle East and APAC.
AI is set to become an increasingly important feature of Islamic banking. It will not only transform the operations and product offerings of Islamic financial institutions but will likely guide emerging ecosystems that connect Islamic financial institutions across the world. Several speakers at the event emphasized the importance of greater cross-border collaboration between Islamic financial institutions.
“We have the early Islamic banks such as the Dubai Islamic Bank to thank for establishing Islamic finance over the past 50 years. In the next 50 years the transformation will come from Islamic fintechs.”
“Islamic finance is not only for Muslims. It’s about transparency and fairness. Everybody wants those things. Innovation should meet the needs of all people who want better products.”
Mohamed Roushdy, Chief Information Officer at Reem Finance in the UAERoushdy points to fintech innovation already taking place in the Middle East, Africa, and Malaysia such as digital finance, crowdfunding platforms, microfinance networks, and sukuk markets.
He adds that opportunities stretch beyond Muslim-majority countries.
Islamic finance is moving from retrofit to design. Institutions that harness the potential of digital platforms, AI and agile methodologies will be able to deliver Sharia-compliant products that meet the needs of their existing customers. They will also be able to grow their markets as increasing numbers of consumers demand ethical finance products that are transparent and fair.
Islamic finance growth
Islamic finance accounts for around 1% of global financial assets, but it is growing 40% faster than conventional finance.
Since the founding of the first commercial Islamic bank, in Dubai in 1975, more than 1,650 institutions throughout the world now specialize in Sharia-compliant finance. Total Sharia-compliant assets are expected to reach close to US$5.95 trillion by 2026.
Qorus Islamic Finance Community
The Qorus Islamic Banking Community will be formally launched at the Reinvent forum in Dubai on November 19 and 20.