Artificial intelligence (AI) is rapidly emerging as a transformative force within the Islamic economy, driving innovation across sectors from finance and food to tourism and education. 

By enhancing Shariah compliance, improving accessibility, and enabling personalized services, the technology is reshaping how the Islamic economy operates, while preserving its ethical foundations.

More broadly, the technology’s potential economic impact is substantial - AI could contribute up to $320 billion to the Middle East's economy by 2030, according to PwC.  

“The synergy between AI and the Islamic economy is immense,” says Badr Saidi, quality manager and technical auditor at Halal Consulting S.L., a Spain-based halal certification body.  

“By leveraging AI in areas like Shariah compliance, ethical finance, halal supply chains, smart cities, tourism, and education, we can drive sustainable growth while staying true to Islamic ethical principles.”

To succeed, Saidi emphasizes the need for collaboration between AI developers, Islamic scholars, and industry leaders to ensure technological advances align with religious values.

Transforming Islamic finance

AI’s most visible impact is unfolding in Islamic finance, where it is streamlining compliance processes, improving fraud detection, and fostering financial inclusion.

“With AI, Islamic banks and financial companies can better understand their customers - how they invest, what they need, and even their risk tolerance,” says Sara Husain Hammad, innovation and technology project manager at Bahrain-based General Council for Islamic Banks and Financial Institutions (CIBAFI). 

“This helps create personalized financial products that comply with Islamic guidelines while still being innovative,” she says.

AI-powered tools are already transforming traditional processes. According to Saidi, machine learning algorithms are now automating the verification of financial transactions to ensure they adhere to Shariah law, avoiding elements such as Riba (interest), Gharar (excessive uncertainty), and prohibited investments.

He adds that AI-driven robo-advisors are also curating tailored halal investment portfolios, while predictive analytics are optimizing Sukuk (Islamic bonds) issuance and improving fraud detection in Takaful (Islamic insurance).

Banks across the Muslim world are already deploying AI. Dubai Islamic Bank (DIB) is using AI tools to assess the Shariah compliance of companies and financial instruments. Bahrain Islamic Bank has launched a digital platform offering access to more than 1,800 Shariah rulings to help simplify complex regulations and encourage industry collaboration. 

Outside of the GCC, Bank Muamalat Malaysia has partnered with Google Cloud to to deploy generative AI and advanced data analytics to help it evolve into a fully digital Islamic institution. Egypt’s Faisal Islamic Bank has embraced AI to modernize and expand its services.

AI is also helping extend financial services to underserved communities. By analyzing alternative data - such as mobile payment history and social behaviour - AI can help individuals with limited credit histories, including those in rural areas or small business owners, to qualify for financing. This supports Islamic finance’s mission of ethical and inclusive banking.

“Combined with Islamic finance’s focus on ethical and community-centered banking, AI can open doors for more people to access financial services in a way that respects their beliefs,” says CIBAFI ‘s Hammad.

Securing the halal supply chain

Beyond finance, AI is shoring up the halal economy by ensuring product traceability, authenticity, and safety. One of the biggest challenges in halal certification is verifying that ingredients and production processes comply with Islamic dietary laws. 

“AI can assist in several ways, including in ingredient label analysis. AI-powered Natural Language Processing (NLP) can scan product ingredient lists and detect potential non-halal components like gelatin, alcohol, or animal-based enzymes,” says Saidi.

AI-powered blockchain platforms now provide end-to-end tracking of halal products, from source to shelf, while computer vision systems monitor production lines for contamination, he adds. Image recognition tools are detecting fraudulent halal logos, and IoT sensors help safeguard halal-certified goods during transportation and storage.

AI is also playing a crucial role in laboratory testing. Advanced spectroscopy and chemical analysis, supported by AI, can identify traces of non-halal substances in food, cosmetics, and pharmaceuticals with high accuracy. Meanwhile, AI-driven analytics are helping businesses forecast demand for halal products, ensuring better inventory management and reduced waste.

However, standardization remains a challenge. According to Saidi, differing certification criteria across countries make it difficult to create a universal AI model, and smaller enterprises may struggle with the costs of adopting these technologies.

Enhancing Muslim-friendly travel

The Muslim-friendly travel market is another area where AI is making strides. According to the State of the Global Islamic Economy Report 2023/24, AI is enabling personalized travel experiences and improving customer service with virtual assistants and predictive analytics.

“Platforms can now generate customized itineraries for Muslim travelers, factoring in prayer times, halal food, nearby mosques, and Muslim-friendly accommodations,” says Saidi.

The Saudi Tourism Authority is pioneering AI-powered services, having recently launched "Sara," a virtual tour guide offering real-time travel advice. The authority has also partnered with Visa to create a Tourism Data Lab to analyze visitor behaviour and spending trends.

Facilitating Islamic education

AI’s role in Islamic education is growing rapidly. NLP models can help scholars and students in deepening their understanding of Quranic and Hadith texts, while AI-based edtech solutions can offer personalized Islamic education and smart learning platforms for different age groups, according to Saidi.

Innovators are developing AI-powered Islamic chatbots, voice assistants, and digital Da’wah tools to facilitate knowledge sharing.

Startups are already making an impact. Pakistan’s Xeven Solutions recently launched Shahada GPT, offering Quranic translations, Hadith explanations, and halal guidance. Similarly, India-based QuranGPT answers religious queries. 

“The primary motivation behind developing QuranGPT was to bridge the gap between religion and modern individuals,” says Raihan Khan, an AI applications engineer and creator of QuranGPT. 

“Nowadays, people don’t want to spend hours flipping through books to find an answer or determine if something aligns with the teachings of the Holy Quran. QuranGPT simplifies this process by providing instant responses in natural language.”

However, combining AI with religious guidance carries significant risks. Without human oversight, AI can easily misinterpret Islamic teachings, spread misinformation, and inadvertently cause harm.

“While AI has the potential to enhance various aspects of the Islamic economy, its intersection with religion must be approached with extreme caution,” Khan warns.

“The biggest concerns lie in the inherent biases of AI models, the risk of misinformation, and the challenge of ensuring religious authenticity. Without strict monitoring, AI could do more harm than good in this space,” he adds.

Limited adoption

Despite AI's promise, adoption in the Islamic economy remains in its early stages. Most Islamic tech startups have yet to fully embrace AI, focusing instead on basic automation rather than sophisticated, AI-driven innovation.

“As of now, AI’s role in fostering innovation in the Islamic economy - particularly in tech startups or digital finance - is minimal,” says Khan. “While AI has the potential to enhance areas like Islamic banking, halal certification, and ethical investment screening, most Islamic tech startups have yet to fully explore or implement AI-driven solutions.”

Solv Protocol, an on-chain fund platform that enables users to earn smart yields on diverse assets via financial NFTs, has introduced a new Shariah-compliant Bitcoin staking product.

SolvBTC.CORE is a liquid staking token developed to meet the principles of Islamic finance. It allows BTC holders to earn yield by helping secure the Core blockchain and participating in decentralized finance (DeFi) activities.

The product was developed in collaboration with Nawa Finance and has received Shariah certification from Amanie Advisors. 

The launch comes as the platform surpasses $2 billion in locked BTC.

The new offering provides Middle Eastern BTC holders with a compliant path to engage in on-chain staking and DeFi, enabling them to earn additional returns on their Bitcoin holdings while adhering to ethical investment standards.

Ryan Chow, founder of Solv Protocol, said the product creates new opportunities for institutional investors in the region. He noted that aligning with both Islamic finance and international regulatory standards could support the broader adoption of digital assets by sovereign wealth funds and traditional financial institutions.

Shaqir Hashim, a core contributor at Nawa Finance, emphasized the high level of BTC ownership in countries such as Saudi Arabia, the UAE, Pakistan, Nigeria, Indonesia, and Malaysia. He said the demand is shifting toward yield-generation solutions aligning with local values and compliance requirements.

Solv Protocol provides infrastructure that enables Bitcoin holders to stake, lend, and invest while earning yield across the DeFi landscape.

The Abu Dhabi National Oil Company (ADNOC) has raised $1.5 billion through ADNOC Murban, the group’s dedicated capital-markets vehicle. 

According to arranging banks, the ten-year sukuk was priced at 60 basis points over comparable US Treasuries and drew investor orders exceeding $3.85 billion.
 
Standard Chartered acted as global coordinator. Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital and MUFG joined as active bookrunners.

The transaction follows a $4 billion conventional bond issue completed in September 2024. ADNOC’s chief investment officer, Klaus Froehlich, has said the company expects to raise between $3 billion and $5 billion in the bond market each year, excluding additional financing options such as sukuk.

ADNOC is allocating an initial $23 billion to lower-carbon projects in pursuit of net-zero operations by 2045.

Earlier this year, it also generated $2.84 billion from a secondary offering of ADNOC Gas shares, increasing the subsidiary’s free float to 14%.

Saudi Arabia’s Public Investment Fund has exceeded its 2024 targets for assets under management by 7%, but the kingdom fell short of other goals under its Vision 2030 plan. 

PIF assets reached $940 billion as of 2024 under the kingdom’s economic transformation agenda, exceeding the annual target of $880 billion. The sovereign wealth fund is expected to reach $2.67 trillion by the end of the decade. 

Unemployment rate among Saudi locals reduced to 7%, surpassing the 2024 target of 7.8% and reaching the kingdom’s 2030 goal six years early, the Vision 2030 Annual Report 2024 showed. Female labour force participation stood at 33.5%, shy of its 2024 target of 35.9%. 

Meanwhile, Saudi home ownership target of 64% for 2024 surpassed last year. 

Saudi Arabia’s GDP reached $937 billion in 2024, rising 1.3% on the previous year, but fell behind last year’s target of $955.76 billion.

Non-oil GDP rose 3.9% year-on-year in 2024 to reach $680.9 billion but trailed its 2024 target of $694.7 billion. Private sector contribution to GDP, however, exceeded the 2024 target of 46% by one percentage point.

Foreign direct investment (FDI) inflows reached $25.6 billion in 2023, but dipped to $20.69 billion in 2024, falling short of its $29 billion target for the year.

As of 2024, 571 companies have established a regional HQ in the kingdom, surpassing the 2030 target of 500 firms.    

S&P Global Ratings revised Saudi’s long-term foreign and local currency rating to 'A+' from 'A' in March, stating that the ‘ongoing social and economic transformation in Saudi Arabia is underpinned by improving governance effectiveness and institutional settings, including deepening domestic capital markets’.

However, the International Monetary Fund (IMF) revised the kingdom’s economic growth forecast in its April report whose forecasts included the impact of tariffs announced by US President Donald Trump on April 2 as well as the initial responses from other countries.

IMF’s April World Economic Outlook report lowered the kingdom’s 2025 GDP forecast to 3%, down 0.3% from its January projection. It expects the country to grow 3.7% next year, down from its previous forecast of 4.1%.   
 

Al Dawli Invest Investment Company (KIB Invest) has introduced its first investment product, the Al Dawli Invest Islamic KD Money Market Fund. The fund is aimed at investors seeking short-term, Shariah-compliant placements.  

The open-ended fund will hold highly liquid short- and medium-term Islamic money-market instruments and will offer weekly subscriptions and redemptions. According to the press release, KIB Invest's strategy focuses on capital preservation while delivering returns comparable to Islamic deposit products.  

Fee terms include no up-front or exit charges to help keep investor costs low.  

The firm plans to offer additional funds with varying risk and return profiles. A fund executive committee has been formed to oversee governance and performance.  

KIB Invest is a subsidiary of Kuwait International Bank and specialises in Shariah-compliant investment solutions. The firm said the new fund expands the group’s product set and gives clients a low-risk, high-liquidity option in Kuwaiti dinars.  

Ruya, a UAE-based digital-first Islamic bank has announced that it is integrating virtual assets into its investment platform, enabling customers to buy and sell cryptocurrencies via its mobile app. 

Ruya has partnered with UAE-based Fuze, a licensed operator in the virtual asset space to broaden its investment gamut and promote ethical Islamic wealth building.

The bank aims to empower customers to sustainably participate in the digital economy, said Ruya's chief executive, Christoph Koster. All listed virtual assets meet the institution’s Shariah-compliance standards.    

The launch comes amid rapid growth in the UAE’s digital-asset sector. The country received more than $30 billion in virtual-asset inflows from July 2023 through June last year, marking a 42% increase.   

Ruya said in a statement that the crypto functionality will sit within its broader investment suite, designed to promote long-term, ethical wealth creation rather than short-term speculative trading. 

Customer support for the new product will be available through community centres and hybrid call centres.  

There was a palpable silence at the end of a premier screening of the documentary ‘Before 1770’ held late last year, punctuated only by distant sobs and the ruffling of tissue packets emanating from the audience of largely Muslim Australians.  

The reason why the feature documentary - showcased in multiple screenings across the country - evoked such an impassioned response was because it represented the connection Australia and its First Nations people held with the Muslim world.  

This deep connection, starting sometime in the mid-1600s, lasted for centuries until 1907 when the last ‘Perahu’ (sailing boat) from Makassar visited Arnhem land in Northern Australia. 

The reason why it resonated strongly with Muslim Australians, was because it was an untold story omitted from Australian history books; a tale intricately linking them with Australia’s First Nations people and their legacy. 

Before White colonisation, Muslim Bugis and Makassar traders would sail with the monsoon winds via the Flores and Savu seas, arriving on the shores of Northern Australia in places like the Kimberley and Arnhem Land to meet First Nations trading partners like the Yolŋu people.  

They would trade in trepang, a type of sea cucumber which was a delicacy and an aphrodisiac they would sell to lucrative Chinese markets. While their motivations for visiting Australia might have been for trepang, this was all part of wider regional trade patterns which connected Arab, Indian and Chinese markets via the Malay Archipelago.

These same Bugis seafaring traders would find themselves immersed in mercantile activity in historic port cities dotted across the Indian ocean like Aden, Muscat, and even as far as Zanzibar.  

Australia for them, was just part of an ancient maritime silk road that swapped out camels for Perahu sailing boats that covered vast distances with monsoonal winds. 

Fast forward a hundred years or so with the rise of the modern global Islamic economy, the vibrant Australian Muslim community like the Bugis before them, are rekindling historic linkages with the Muslim world through trade, halal food and Islamic finance.  

Australia is a melting point of a vibrant and dynamic Muslim population base comprising more than 70 different ethnicities. Nearly a million Muslims - more than half under the age of 25 -reside in growth areas in all the major cities and help create robust networks for business and investment opportunities.  

Halal food is now an AU$2 billion industry that helps serve the local Muslim community as well as major export markets such as Indonesia, Malaysia, the UAE and Saudi Arabia. Over 70% of Australian abattoirs are now reported to be halal certified.  

Muslim students from around the world are fostering long-lasting linkages with Australia. More than 30,000 students from Malaysia, Indonesia, and Pakistan and over 15,000 from the GCC are enrolled across universities and higher education institutes in the country. The Brunei government sends hundreds of students on scholarships to Australian universities each year. 

Education services with Muslim-majority countries amount to nearly AU$4 billion annually, generating revenue as well as creating investment opportunities across several quarters, including student accommodation, migration and employment, and halal food services. 

Lastly, Islamic finance is perhaps an untapped gold mine for Australia, having remained under the radar of Islamic investors worldwide for decades. For enterprising investors, Australia emerges as an unexpected yet compelling destination for Islamic investment. 

For select Islamic investors, Australia is not a distant continent, rather a destination that is geo-strategically situated on the fringes of vibrant Southeast Asian economies and one that offers a unique combination of a well-regulated market alongside growth opportunities for Islamic-conscious capital. 

The recently signed Australia-UAE Comprehensive Economic Partnership Agreement is the first Free Trade Agreement between Australia and a Middle Eastern country, facilitating investments in local projects. Shariah-compliant real estate investment has gained ground too, with institutions such as the National Australia Bank (NAB) offering Islamic products, enabling Muslims to finance their projects.

This unique offering has facilitated numerous partnerships between Islamic investors from the GCC and Southeast Asia and the vibrant and entrepreneurial Muslim business community in Australia. 

Shariah-compliant fixed-income solutions is another area of opportunity with Australia one of the rare AAA rated countries in the world according to Moody's, S&P and Fitch. There is a slew of ASX100 companies that are investment grade and above, offering a huge opportunity for Islamic fixed-income products or Sukuk bonds. 

With ongoing tariffs and geopolitical realities, perhaps Australia is not as far away as one might believe. With its growing young and dynamic Muslim community, Australia offers a combination of economic stability, diverse investment sectors, and financial governance. Throw delicious halal food in the mix and we have a sweet spot of opportunities. 

Perhaps now is the time for Islamic investors to set their sails Down Under. 
 
Dr Imran Lum is the head of Islamic finance at a major Australian bank. He is the host of the ‘Muslim Money’ Podcast and the author of 'A Comparative Study of Riba and Islamic finance in Australia and the UK (Routledge)'.

The opinions shared here are his own and do not reflect the views of his employer
 

Here's a roundup of key developments across the Islamic lifestyle ecosystem during the month of April

Editor's Note: With the Hajj season upon us, Saudi Arabia is expected to dominate headlines - from additional inbound flights to electronic entry permits for expatriate workers, the kingdom is ensuring for a seamless pilgrim experience.  

Trade Developments

Saudi Arabia

Umrah and Ziyarah Forum in Madinah Concludes with agreements

The second edition of the Umrah and Ziyarah Forum, held from April 14 to 16, concluded with strong local and international participation.

During the forum, 4,251 collaboration agreements were signed, a 25% increase from the previous edition, highlighting its role in enhancing services for pilgrims.

The forum featured 150 exhibitors from 100 countries, representing various stakeholders, and included dialogue sessions and workshops addressing challenges and opportunities in the Umrah and visitor experience. (Saudi Press Agency)

Saudi Arabia

Electronic Makkah entry permits now available for expats

The General Directorate of Passports in Saudi Arabia has announced the commencement of electronic applications for entry permits to Makkah for expatriate workers ahead of the upcoming Haj season.

Expatriates can now apply through the Ministry of Interior's digital platforms, including Absher and the Muqeem portal, without the need to visit passport offices.

The service is integrated with the Tasreeh platform for issuing Haj permits, streamlining the process. (The Siasat Daily)

Company News

France / Saudi Arabia

Transavia France to launch Madinah flights

The Saudi Air Connectivity Program has partnered with the Al Madinah Region Development Authority to launch Transavia France's operations in Saudi Arabia.

Transavia, a French low-cost airline owned by Air France, will begin flights from Paris-Orly, Lyon, Marseille, and Toulouse to Madinah starting in October. (Zawya)

Regulatory

Nigeria

Sokoto reintroduces Hisbah Corps to promote Islamic culture

The Sokoto State government has re-established the Hisbah Corps to promote Islamic culture, moral discipline, and values in the state.

The Hisbah Corps is tasked with fostering a cleaner and safer society, tackling immorality and sinful acts, and promoting modesty.

The government has provided operational vehicles, motorcycles, and office accommodations for the Hisbah Corps, and will make monthly allocations to support their activities. (365 Daily)

Pakistan is aiming to implement an interest-free Shariah-compliant banking system by January 2028. While the ambition reflects a momentous shift toward an Islamic values-based financial system, practitioners caution that unresolved challenges could undermine the transition.

Renewed political will
In April 2022, the Federal Shariat Court (FSC), the country’s constitutional Islamic religious court, ruled that the entire banking system must be completely free of riba – more commonly known as interest - by the end of 2027. The court instructed federal and provincial governments to amend relevant banking laws to comply with the Shariah legislation. 

The directive, however, wasn’t the FSC’s first attempt to push for a fully Islamic banking system. The religious court made an initial declaration in 1999, notes Dr Sanaullah Ansari, CEO of Al-Iqtisad Consulting, only for it to be delayed by later governments through appeals and legal reviews. 

“This process continued and finally, in April 2022, FSC ordered the government to convert the current conventional banking system by December 31, 2027,” he says. 

However, this time there is adequate political will to introduce Islamic banking, complemented by a clear roadmap accorded by the State Bank of Pakistan (SBP), the country’s central bank. Following the FSC’s decision, the SBP released its five-year plan (2023–2028), setting ambitious goals to transform the conventional banking sector. 

There are currently 22 banks operating in Pakistan, including six fully-fledged Islamic lenders. Many of the remaining conventional banks either operate Islamic windows or have started planning for a full conversion. United Bank Limited (UBL) and Faysal Bank have transitioned, while Bank of Khyber and National Bank of Pakistan are en route. Others like Bank of Punjab are also exploring the shift.

In parallel, the Securities and Exchange Commission of Pakistan (SECP) - the country’s financial regulatory agency - introduced the Shariah governance guidelines in January 2023.

These apply to non-banking financial companies, Takaful operators, and private pension funds, with the aim of deepening Islamic capital markets.

Sovereign debt, coordination mar outlook 
Pakistan is the second-largest Muslim-majority country in the world. However, despite strong numbers, financial inclusivity across the country is fairly tepid. The country’s sovereign debt profile is another critical factor; the IMF notes that government debt stands at 71.4% of the Southeast Asian nation’s GDP, much of which is denominated in conventional, interest-bearing instruments.

“Most of the government’s liabilities are in conventional form,” says Mohamed Damak, head of Islamic Finance at S&P Global Ratings. “The government could choose to issue only sukuks going forward to refinance all commercial debt and net new borrowings, assuming that the market appetite for these instruments will be there.”

Damak adds that a significant portion of the debt is in the form of multilateral loans, bilateral loans, and central bank swap lines, with some of the multilateral loans having very long-term tenors. “It remains to be seen if and how these can be converted or structured in a Shariah-compliant format,” he adds.

Farrukh Raza, CEO of Islamic Finance Advisory & Assurance Services (IFAAS), believes that renegotiation is likely to take time due to legal and risk concerns from creditors, as well as the complexity of restructuring existing debt. “Stakeholders need to stay focused and resolve these matters as soon as possible.” 

Despite steps taken by the SBP and SECP, several market practitioners highlight a lack of coordination between key institutions and an absence of clear, realistic timelines.

“There needs to be a more well-thought-out process with a realistic plan and determined goals,” says Raza. “There needs to be better coordination with policies and implementation among the different entities in the country.”

He outlines three critical requirements for a successful transition.

“There needs to be a political will to genuinely support this transition and all stakeholders to be aligned on making it happen,” he says. 

“Secondly, you need a well-structured roadmap with clear targets and timelines for everyone to understand and work towards. Thirdly, you need to create a national champion among state institutions to own, lead and deliver this transition.”

This lack of coordination is closely tied to insufficient communication. Public engagement has been limited, with few workshops, conferences, or awareness campaigns to educate stakeholders about what this transition entails, according to Ansari.

“While the SBP and SECP have done valuable work, the broader market is still unclear about how this transition will play out,” he says. “Without consistent messaging and cooperation between players, implementation by 2027 will be difficult.”

Changing perceptions
A significant challenge lies in public perception. Many consumers raise doubts on the veracity of the Islamic banking system, considering it a repackaged version of the conventional banking system. This lack of trust dents its uptake as well as its credibility. 

Ansari notes that many banking customers question whether there is a meaningful distinction between Islamic and conventional products. “Whilst a lot of work has been done to facilitate Islamic banking, there is still a perception that it is merely a replication of conventional banking,” he says.

Sceptics also point to challenges in countries that have adopted Islamic financial systems, including Iran, Sudan and Afghanistan, though Raza believes comparisons with those countries to be unfair. 

“It’s not fair to compare Pakistan’s transition with these countries because all of them remain challenged on the international stage,” he says. “The issues they face are political in nature and not due to their financial systems being Shariah-compliant.”

Creating goodwill through education and awareness in addition to a clear timeline and roadmap to assimilate these changes thus remains key.