Ensuring the future of Islamic finance is collective, not corporate

Islamic finance was never meant to be an institutional product reserved for the elite. When Islam introduced its financial ethics more than 1,400 years ago, the goal wasn’t corporate compliance but justice.

From Zakat (obligatory almsgiving) to Waqf (endowment for public benefit) to Shura (consultative decision-making), early Islamic finance systems were designed to empower individuals, protect communities, and keep wealth in circulation.

These weren’t abstract ideas; they were real, operational systems that funded schools, fed families, and supported the vulnerable — all without profit as the endgame.

Take the Bayt al-Mal, a public treasury established during the caliphate of Umar ibn al-Khattab (RA), which ensured basic needs were met. It distributed wealth to the poor, paid stipends to widows and orphans, and reflected the principle of structured social finance.

Meanwhile, Waqf allowed Muslims to endow property and wealth for a enduring public cause, from building hospitals to digging wells. These examples weren’t exceptions; they were the norm.

The Qur’an reminds us: “So that wealth does not circulate only among the rich from among you.” (Surah Al-Hashr, 59:7).

The Prophet Muhammad ﷺ said, “The believers are like one body; if one part hurts, the whole body feels the pain.” (Sahih Muslim, 2586).

These aren’t just quotes, they are marching orders.

When growth replaces purpose
As Islamic finance scaled up, it started looking more like the systems it was meant to disrupt.

Shariah-compliant labels became more about marketing than mission. Many financial products began to mimic conventional models — centralised, opaque, and profit-first. Somewhere along the way, users stopped being community members and started being “policyholders.” 

Mutual aid became legal paperwork. And spiritual intention got lost in the pursuit of market share.

This isn’t to dismiss the efforts of Islamic financial institutions. They played a role in legitimizing Islamic finance globally. But scale came with tradeoffs. In trying to compete with conventional systems, many forgot why Islamic finance existed in the first place.

The price of playing the corporate game
This shift has led to three major problems. First, many lower-income Muslims, migrants, and informal workers find Islamic finance inaccessible — it's too complex, too expensive, and feels unfamiliar.

Second, people begin to lose trust when Shariah-compliant products feel indistinguishable from conventional ones.

And third, users are left disempowered, treated as passive consumers with no say in how their money is used. For example, in Takaful (Islamic cooperative protection), contributors face layers of bureaucracy and lack transparency, while profits often benefit shareholders, not the community.

Tools to rebuild and the values to guide them
The good news? We have the tools to change course and the values to lead the way.

Blockchain and decentralized autonomous organizations (DAOs) allow us to rebuild transparent, community-governed systems where people participate, vote, and benefit. 

We’re not talking about theory here. Platforms like TheLifeDAO are already using these tools to help Muslims and like-minded individuals around the world pool funds to cover end-of-life costs, not through insurance, but through real, peer-powered protection.

DAOs bring back the spirit of Ta’awun (mutual cooperation) with modern infrastructure. No shareholders. No middlemen. Just people looking after one another, with full visibility on how their money is used and where it's going.

Reclaiming the core of Islamic finance
This isn’t a trend, it’s a reset. Community-based Islamic finance brings transparency back into how decisions are made. It gives people a voice in systems that affect their future. And it revives the real meaning of halal finance, not just in contracts, but in purpose.

It’s about building systems that feel spiritually aligned, not just technically compliant. 

The Qur’an says, “Indeed, Allah commands justice and good conduct…” (Surah An-Nahl, 16:90).

Justice doesn’t trickle down from the top. It starts with putting the ummah back at the center.

Where do you start?
You don’t need to be a scholar or fintech expert to be part of this shift. It starts with asking better questions.

Does this product actually help the people it claims to serve? Is it accessible and transparent? Do I have a voice in how it works? And if the answer is no, maybe it’s time to look elsewhere.

Instead of relying on systems built for profit, consider those designed around people.

Support platforms that prioritize shared governance, spiritual integrity, and collective benefit. Whether it’s a local cooperative or a global DAO, choosing values-aligned alternatives is more than just a financial move, it’s a stand for justice.

Sharene Lee is the chief operating office & co-founder of Takadao