The AI sheikh will review your contract now

AI may help lower the cost of Islamic finance, making the process more efficient with less paperwork — and possibly more competitive with traditional banking, an Islamic finance scholar tells EnterpriseAM.

The Plan: Because Islamic law bans interest, banks structure financing as trades, leases or partnerships, each of which requires multi-step contracts and sign-off from a panel of Shariah scholars. The idea is that AI can reduce that paperwork burden, Ahmet Faruk Aysan LinkedIn, associate dean for research at the College of Islamic Studies at Hamad Bin Khalifa University in Doha, tells EnterpriseAM.

Automation cannot replace Shariah scholars deciding whether the underlying structure of a deal reflects the intent and principles of Islamic law, Aysan says. But, ideally, “scholars will spend less time on repetitive ex-post review” and more time translating rulings into machine-readable rules and overseeing how systems apply them, he says. This also means Shariah boards will need members or advisers who understand how AI models work, Aysan adds.

Some companies are already raising money off the idea. Abu Dhabi-based Mal raised a massive USD 230 mn seed round to build what it calls the world’s first AI-native Islamic digital bank. The service hasn’t launched yet.

Why it matters: Islamic banks hold roughly a quarter of the UAE’s banking assets, worth AED 1.4 tn in June, and the government wants that to reach AED 2.56 tn by 2031.