The integration of Shariah compliance in information system of Islamic financial institutions Qualitative evidence of Malaysia

Purpose The purpose of this study is to explore the integration of Shariah compliance in the information system of Islamic financial institutions (IFIs) in the context of Malaysia. Design/methodology/approach By applying qualitative approach in the form of in-depth/structured interview of qualified respondents within Islamic financial industries. Findings The result of this study indicates that information system advancement will give an increasing level of competitive advantages. Also, the result indicates that the internal control and information system played a vital role in ensuring the Shariah compliance and translating and circulating the Shariah guidelines among the IFIs' departments and staffs. In terms of Shariah integration in information system, there is a consideration during the development of an information system. Shariah will be an element that needs to be accounted for to develop the information system for IFI. Research limitations/implications This includes the scope of the study which is based on Malaysian Islamic banks only. Hence, future studies are recommended to extend this endeavor to other contexts as well. Furthermore, although the initial sample was covering nine IFIs, only two IFIs accepted to participate in the interview. It is suggested that the future studies involve more participants and apply different research techniques such as focus groups or questionnaire survey. Practical implications Make sure employees who are in charge of performing any function related to Shariah (i.e. Shariah review, Shariah audit, Shariah research, Shariah risk management) have a basic knowledge on information technology (IT) and information system. Continuous trainings for IFIs' employees covering the information system and internal control system issues related to the Shariah compliance. Focus on seminars and conferences on outstanding issues related to information system technology in IFIs. Promoting programs and subjects specialized in information system technology in IFIs. IFIs should allocate a budget for system development or enhancement in the financial budget ensuring that IT system is incorporated in Shariah compliance. IFIs should consider enhancement of Shariah compliance encompass and the alignment into the IT system as continuous process, as well as one of their strategic plan aspects. Bank Negara Malaysia as a regulatory body of IFIs should emphasize on regulating the Shariah aspects with regard to the IT system. Originality/value This paper's contributions lies in the enhancement of the development of the Shariah compliance literature, as well in the integration of Shariah compliance and information system in IFIs.