Islamic finance’s $4T sector embraces prosocial AI

The convergence of Islamic finance principles and prosocial AI is creating a values-driven approach to financial technology that prioritizes ethical outcomes alongside efficiency. This alliance between a $4 trillion global Islamic finance sector and AI systems designed to benefit people and planet demonstrates how traditional moral frameworks can guide technological innovation toward more sustainable and socially responsible outcomes.

What you should know: Both Islamic finance and prosocial AI share fundamental commitments to ethical principles, social justice, and human wellbeing that extend beyond profit maximization.

• Islamic finance prohibits riba (usury), gharar (excessive uncertainty), and mysir (gambling), while prosocial AI advocates for systems centered on human values with regenerative intent for people and planet.
• The Islamic principle of maslaha (public interest) aligns with prosocial AI’s emphasis on collective benefit, creating what experts call a “win-win-win-win” scenario for individuals, communities, countries, and the planet.
• Both frameworks recognize that unchecked pursuit of efficiency or profit can lead to societal harm.

How hybrid intelligence bridges the gap: The combination of natural and artificial intelligence offers a compelling solution for integrating AI innovation with traditional Islamic finance principles.

• AI systems excel at processing vast amounts of data and identifying patterns, while human intelligence provides contextual understanding, moral reasoning, and cultural sensitivity.
• Traditional Islamic scholars provide interpretive frameworks and ethical oversight, while AI handles routine compliance checking, risk assessment, and pattern recognition.
• This collaboration amplifies rather than replaces human expertise, freeing scholars to focus on complex interpretive work and strategic guidance.

Real-world applications: Several practical implementations demonstrate how this convergence is already taking shape in the financial sector.

• Kuwait Finance House launched Tam Digital Bank in 2023, showing how AI can serve Islamic banking principles.
• NurAI, a fully Sharia-compliant app launched at the ASEAN AI Summit, exemplifies the interplay between religious wisdom and high-tech solutions.
• AI-driven algorithms can analyze customer behavior to offer tailored products while ensuring compliance and significantly improving security.

Why shared values matter: Both systems emphasize transparency, risk-sharing, and collective benefit over individual gain.

• Islamic finance’s prohibition of gharar (excessive uncertainty) aligns with prosocial AI’s emphasis on transparency and explainability in algorithmic decision-making.
• The concept of takaful (mutual guarantee) in Islamic insurance mirrors AI systems designed for collective benefit.
• Both recognize that individual prosperity is meaningless without community wellbeing.

The challenge of double literacy: Success requires professionals fluent in both Islamic finance principles and AI capabilities.

• Financial professionals must understand Shariah compliance, risk-sharing mechanisms, and ethical investment criteria alongside AI algorithms, limitations, and potential biases.
• AI developers working in Islamic finance must grasp philosophical foundations like maslaha (public interest) and practical implications of gharar prohibition.
• Institutions like INCEIF, Malaysia’s global university for Islamic finance, are pioneering educational programs that cultivate this dual competency to ensure technological solutions genuinely serve Islamic finance objectives.

Innovation within ethical boundaries: Both frameworks prove that moral constraints guide rather than stifle innovation toward more sustainable outcomes.

• Examples include sukuk (Islamic bonds) using AI to optimize profit-sharing arrangements in real-time and zakat calculation systems that automatically identify and distribute wealth to those in need.
• Research institutions provide theoretical foundations for practical implementations through a research-practice loop.
• As Cornelia C. Walther notes: “We cannot expect the technology of tomorrow to be better than the humans of today. Garbage in, garbage out versus values in, values out.”

What experts recommend: The convergence offers practical guidance for different stakeholders in the financial technology ecosystem.

• For bankers: Start small but think systematically, implementing AI tools that enhance transparency while maintaining human oversight for complex decisions.
• For those with Islamic affinity: Embrace technology as a means of strengthening Islamic values, demanding explainable AI systems aligned with Shariah principles.
• For researchers and educators: Focus on developing hybrid intelligence that combines natural and artificial intelligence while remaining open to all cultures and religious orientations.