Public Policy Transformation in the Utilization of Artificial Intelligence in Sharia Financial Institutions in Indonesia
Keywords:
Artificial intelligence,, Digital governance,, Policy transformation,, Public policy,, Sharia financial institutions.Abstract
This article critically examines the transformation of public policy in the utilization of Artificial Intelligence (AI) within Indonesia's Islamic financial institutions (IFIs). National Islamic banking assets reached IDR 980.30 trillion by the end of 2024 (market share 7.72%), while the Financial Services Authority (OJK) issued its AI Governance Handbook for banking in April 2025, marking a critical juncture at which technological innovation and shariah governance must advance together. This study employs a qualitative descriptive method with policy analysis, library research, document analysis, and content analysis applied to statutory regulations, OJK and Bank Indonesia regulations, DSN-MUI fatwas, national Islamic finance roadmaps, Indonesia's National AI Strategy, OECD AI Principles, the UNESCO Recommendation on the Ethics of AI, and official documents from the World Bank, IMF, Islamic Development Bank, AAOIFI, and IFSB, analysed using the Miles, Huberman and Saldana interactive model. The findings show that AI adoption among Indonesian IFIs remains exploratory and fragmented, concentrated on fraud detection, credit scoring, chatbot-based customer service, and operational-compliance automation, but not yet systemically integrated with algorithmic shariah-compliance oversight. Compared with Malaysia, the United Arab Emirates, and Saudi Arabia, Indonesia faces regulatory fragmentation, institutional gaps, and limited digital literacy among shariah supervisory personnel. The article proposes an eleven-stage Policy Transformation Framework and stakeholder-specific policy recommendations, contributing theoretically to digital-governance and Islamic-finance literature, practically to the industry, and directly to Indonesian AI policymakers.
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