Financial Services by BigTech: Impacts and Opportunities for Islamic Banks

The emergence of BigTech companies in the financial services sector has raised concerns about their potential to disrupt traditional banking and establish their own financial institutions. This research investigates the extent of BigTechs’ activities in payments and finance and explores their intentions in disrupting the banking sector. The study adopts a qualitative methodology to critically analyse market reports and credible market intelligence websites and official websites of news agencies. The findings reveal that BigTechs’ activities are selective and aimed at supporting their core businesses in commerce, technology, advertising, and social media, rather than disrupting banking. However, their involvement in Buy Now Pay Later (BNPL) financing poses a challenge to retail banks, prompting Islamic banks to establish their own BNPL facilities. Procedural complexities related to Sharīah compliant structuring can be addressed using financial technologies like smart contracts and payment gateways. Islamic banks could also collaborate with FinTechs to create frequently used Muslim lifestyle apps or super apps that offer embedded f inance for the ḥalāl economy. The study concludes that Islamic banks should consider these opportunities to meet the younger customers’ mobile shopping and social media communication habits.