TRANSFORMING PAKISTAN’S DIGITAL ECONOMY THROUGH ISLAMIC FINTECH: SHARIAH-COMPLIANT INNOVATION FOR INCLUSIVE GROWTH

Abstract

This study examines the expanding role of Islamic FinTech in reshaping Pakistan’s financial ecosystem and its potential to promote inclusive, Shariah-compliant economic development. Given Pakistan’s large Muslim population and accelerating digital connectivity, the country represents a promising environment for Islamic digital financial innovation. The paper explores how emerging technologies—including mobile-based financial services, peer-to-peer (P2P) financing platforms, and blockchain-enabled applications—are being adapted to align with Islamic financial principles, particularly to support unbanked and underserved communities, with a focus on rural and low-income segments. The study highlights the sector’s contribution in improving financial access, transaction transparency, trust, and ethical financing practices, while also identifying key constraints limiting its expansion. These constraints include regulatory and governance gaps, limited technological readiness, infrastructure disparities, and low consumer awareness and trust in digital Shariah-compliant products. Drawing on a structured review of recent developments in Pakistan’s Islamic finance and FinTech sectors, the paper underscores Islamic FinTech’s potential as a tool for socio-economic transformation and proposes policy directions to strengthen its institutional support, regulatory alignment, and public adoption. The study concludes that targeted reforms and strategic investment in digital capacity can position Islamic FinTech as a sustainable driver of inclusive growth within Pakistan’s evolving digital economy.