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The Role of Artificial Intelligence in Advancing Islamic Banking Operations
Author : Dr. Safwan Odaybat
Date Added : 03-01-2024

The Role of Artificial Intelligence in Advancing Islamic Banking Operations

 

All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.

 

One of the emerging topics for which seminars and conferences are held, and attracts researchers to study and explore its potential developments across various fields and disciplines is the subject of Artificial Intelligence. This topic elicits concerns about its potentially destructive impacts on one hand, while on the other hand, it raises hopes and expectations for significant positive effects on improving the quality of life and serving humanity.

 

Before delving into explaining the impact of Artificial Intelligence on Islamic banking, it is essential to clarify the meaning of Artificial Intelligence and Islamic banking:

 

Artificial Intelligence can be defined as a set of technologies and software aimed at enabling computer systems to perform tasks that are typically considered important for human intelligence and facilitate operations associated with specific tasks.

 

Artificial Intelligence relies on data and algorithms to achieve specific objectives. Its applications encompass a diverse range of fields such as machine learning, natural language processing, robotics manufacturing, medical diagnosis, risk management, and more.

 

Islamic banking can be defined as a financial system based on the principles of Islamic law (Sharia). This system requires abstaining from practices such as usury (interest), uncertainty or speculation (Gharar), and injustice. It encourages financing and investment in ways that are in tune with Islamic values and principles.

 

The role of artificial intelligence in advancing the operations and services of Islamic banking is highlighted through the following:

 

1-Enhancing Efficiency and Risk Management:

Artificial intelligence can contribute to the development of Islamic banking by improving its operational efficiency through enhancing analysis processes and risk management. One possible means to achieve this is by utilizing machine learning to enhance credit assessment, identifying potential loans with greater accuracy and efficiency. Additionally, artificial intelligence will contribute to boosting employee efficiency by selecting suitable development, training, and educational methods tailored to their needs.

 

2-Development of Innovative Financial Products:

Artificial intelligence enables Islamic banking to develop innovative financial products that align with the principles of Islamic Sharia. For example, smart investment solutions can be developed based on financial analytics and Sharia-compliant guidelines.

3-Enhancement of Customer Experience:

Artificial intelligence can improve customer experiences in Islamic banking by providing personalized financial services tailored to the specific needs of customers. It can offer accurate investment guidance that aligns with customers' goals without conflicting with Islamic values.

4-Combatting Money Laundering and Terrorism Financing:

Artificial intelligence can contribute to enhancing financial integrity through intelligent operations that develop and improve the quality of monitoring financial transactions. Consequently, it can uncover all illicit and internationally prohibited activities, including money laundering and terrorism financing.

 

5-Facilitating Compliance with Islamic Sharia:

Artificial intelligence contributes to the development of Islamic banking by achieving better compliance with the rules of Sharia. This can be accomplished by providing guidance to financial professionals or by enhancing financial audit and monitoring processes.

 

In conclusion, the topic of the impact of artificial intelligence on Islamic banking in general requires precise scientific studies and research to highlight both the positive aspects and potential challenges. While artificial intelligence may contribute to enhancing the efficiency of financial services and their compliance with Sharia, ethical considerations and Islamic values must be taken into account in the application of this modern technological advancement.

 

Article References:

1-Book: "Artificial Intelligence and Its Impact on the Economy and Islamic Banking" by Dr. Rafiq Ali Suleiman.

2-Book: "Islamic Banking and Artificial Intelligence Technology: Challenges and Opportunities" by Dr. Mohammed Al Nuaimi.

3-Research Paper: "Artificial Intelligence Technology and Its Impact on Islamic Financial Services" by Researcher Ahmed Abdullah Al Salman.

 

 

 

 

 

 

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Summarized Fatawaa

I wish to purchase an online account (a gaming account), and its ownership will be transferred to me. However, my friend will purchase it on my behalf, and I will repay him in deferred installments with an added profit margin to account for the installment sale. What is the ruling of Islamic Law on this transaction?

 
All praise is due to Allah, and peace and blessings be upon our master, the Messenger of Allah.
 
The ruling on selling electronic games depends on the ruling of the game itself: if the game is permissible, then selling it is likewise permissible. However, if the game contains Sharia violations that render playing it impermissible, then selling it in that case is neither valid nor permissible. Therefore, we advise the necessity of reviewing the Sharia guidelines for electronic games set forth in Fatwa No. (3369).
 
Accordingly, if the game is permissible, a person may purchase it, take legal possession of it, and subsequently sell it in deferred installments for a price higher than its purchase price. The General Iftaa' Department has permitted dealing through Murabaha, while emphasizing the necessity of observing the Sharia conditions required for this transaction; please refer to Fatwa No. (2861). And Allah Almighty knows best.

A man led the people in prayer as imam, and at the end of the prayer he performed a prostration of forgetfulness (*sujūd al-sahw*) because he had omitted a short *sūrah* after al-Fātiḥah. What is the ruling on his prayer and that of those praying behind him?

 

All praise is due to Allah, and peace and blessings be upon our master, the Messenger of Allah.
According to the Shāfiʿī school, it is sunnah to recite a sūrah after al-Fātiḥah in the prayer. One who omits it has a valid prayer, and no prostration of forgetfulness (sujūd al-sahw) is prescribed for omitting it. If someone performs sujūd al-sahw for its omission while knowing the ruling and remembering it, his prayer is invalidated. But one who is ignorant of the ruling, or who did so out of forgetfulness, his prayer is not invalidated, because this is among the matters that are obscure to people, and ignorance of it is not restricted to those who recently entered Islam.
Shaykh al-Islām al-Shams al-Ramlī said in Nihāyat al-Muḥtāj ilā Sharḥ al-Minhāj (Vol.2/p.70): “The remaining sunnahs are not compensated for by prostration, such as the remembrances (adhkār) of bowing and prostration, that is, the opening supplication (duʿāʾ al-iftitāḥ) and the sūrah, in accordance with the base rule, because they are not of the same nature as what has been reported [as compensable]. If one prostrates for any of them deliberately, his prayer is invalidated, unless he is excused due to ignorance. As for the objection raised that the ignorant person does not know that sujūd al-sahw is prescribed, and whoever knows it knows its place, this is refuted by denying such a necessary connection, for the ignorant person may hear only that sujūd al-sahw is prescribed before the salām, and so assume that it applies to every sunnah and is not restricted to its prescribed place.”
This is among the matters that are obscure, in which the mukallaf is excused for ignorance, as stated by al-Shabrāmallisī in his Ḥāshiyah ʿalā Nihāyat al-Muḥtāj (Vol.2/p.70).
However, if the imam prostrates, and the follower (maʾmūm) presumes that his imam’s prostration is for a reason for which one does not prostrate, it is not permissible to follow him in it, so long as the follower knows the ruling.
Accordingly, the prayer of one who did not recite a sūrah after al-Fātiḥah is valid, and sujūd al-sahw is not prescribed for it. Whoever prostrates out of ignorance or forgetfulness, his prayer is valid, because this is among the issues hidden from the general public. But whoever prostrates while knowing the ruling and remembering it, his prayer is invalidated. And Allah Almighty knows best.

Is Zakah (obligatory charity) due on land intended for selling?

Yes, lands intended for trade are valued, and Zakah is paid according to their estimated value after a lunar year had lapsed, but if the owner didn`t pay the due Zakah, then he should do so after selling them.

Who should pay the Zakah (obligatory charity) from the orphan`s money?

His/her guardian, and if the latter fails to do so, then the orphan himself/herself is obliged to pay the Zakah once he/she reaches puberty, and is capable of handling his/her own affairs. And Allah Knows Best.

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