A Hybrid Governance Framework for Islamic Fintech Sustainability: Integrating Shariah Compliance and Digital Innovation through Maqashid al-Shariah Principles

Abstract

The rapid evolution of Islamic fintech has transformed the architecture of financial intermediation, yet challenges of governance, ethics, and sustainability persist. This conceptual paper proposes a Hybrid Governance Framework integrating Shariah compliance governance and digital innovation governance through the lens of Maqashid al-Shariah. Using a theoretical synthesis approach, the study draws upon financial inclusion theory, technology governance, and Islamic ethical principles to construct a holistic governance model for sustainable Islamic fintech ecosystems. The framework identifies five interrelated components ethical foundation, innovation layer, governance mechanism, compliance feedback loop, and outcome dimension that collectively ensure both agility and moral integrity. Findings indicate that embedding Maqashid al-Shariah within digital governance enhances ethical accountability, user trust, and systemic resilience. The study contributes to Islamic finance theory by reconceptualizing Shariah governance as an ethical innovation process rather than a regulatory constraint. Policy-wise, it calls for integrated RegTech systems and cross-border standardization of digital Shariah governance. The paper’s novelty lies in advancing a faith-based digital governance paradigm, aligning spiritual values with technological sustainability.