Islamic Financial Technology (Fintech): Bridging the Gap between Islamic Financial Literacy and Inclusion in Indonesia

Abstract

Aims: This study aims to identify the need for Islamic financial technology (Islamic fintech) as an alternative to support Islamic financial literacy and inclusion in Indonesia. It also describes the factors that hinder the conversion of Islamic financial knowledge into the actual use of formal financial services and summarizes governance pillars, drawn from the literature and oriented toward Maqashid al-Shariah, to promote equitable and sustainable financial inclusion. Method: This study employs a library research method with a qualitative-descriptive approach. Data were collected through a review of scientific literature, regulations, and official reports relevant to Islamic financial literacy, financial inclusion, and the development of Islamic fintech in Indonesia. The literature was identified, selected, classified into five dimensions (Table 1), and synthesized descriptively to describe the literacy-inclusion gap, its contributing factors, and the opportunities and challenges of Islamic financial digitalization. The study does not apply thematic coding, empirical testing, or the development of a formal framework. Results: The findings reveal a substantial gap between Islamic financial literacy and Islamic financial inclusion in Indonesia, as reported in national survey data. This gap indicates that public knowledge has not been fully translated into the utilization of Islamic financial services. This phenomenon is explained through the concept of symbolic literacy, which refers to a condition in which people recognize Islamic financial terminology but lack a substantive understanding of contractual structures (akad), risks, operational mechanisms, and the benefits of Islamic financial products. Other barriers include low institutional transparency, pseudo-inclusion practices that may undermine public trust, limited digital infrastructure, and misalignment between technological innovation and regulatory readiness. Islamic fintech services, including peer-to-peer lending, crowdfunding, and electronic waqf (e-waqf), have the potential to expand financial access. However, the literature synthesis suggests that optimizing their role requires four governance pillars: regulation, technology, social engagement, and spirituality (Table 2). These pillars are supported by contract-based financial education, algorithmic ethics audits, consumer protection, and community collaboration. Novelty: The novelty of this study lies in the use of symbolic literacy and pseudo-inclusion as analytical concepts for explaining the gap between understanding and utilizing Islamic financial services, as well as in the synthesis of four Islamic fintech governance pillars oriented toward Maqashid al-Shariah. The findings highlight the need for integrated regulation, greater institutional transparency, financial education emphasizing contractual understanding, ethical oversight of technology, and the development of accessible digital services tailored to community needs. Accordingly, Islamic fintech should not merely expand financial access but also promote substantive, responsible, and sustainable financial inclusion in Indonesia.