Affiliation:
1. State Islamic University Syarif Hidayatullah, Jakarta
2. Parepare State Institute of Islamic Studies, Indonesia
Abstract
This study examines the implementation of digital innovation in the practices of Sharia banks in Indonesia and its impact on increasing operational efficiency and the variety of financial services offered to micro, small, and medium enterprises (MSMEs). Using a qualitative approach, this research identifies the strategies and approaches used by Sharia banks in digitizing their products and services to support MSME expansion into international markets. The results show that the adoption of digital technologies such as AI and blockchain by Sharia banks can enhance operational efficiency, expand financial services, and improve the global competitiveness of MSME products. However, MSMEs still face significant challenges, including a lack of financial literacy and access to digital technology. Policy recommendations include improving digital literacy, collaborating with fintech, developing technology-based financing models, and evaluating government policies. This study aims to provide guidance for Sharia banks and the government in formulating effective strategies to advance the Islamic economy and MSMEs in Indonesia through the adoption of digital technology.
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