Analysis Of Islamic Fintech In Supporting Local Community MSMEs

Abstract

This study examines the role of Islamic fintech in enhancing financial accessibility, expanding financial inclusion, and strengthening sharia compliance among MSME actors. The findings indicate that sharia-based fintech platforms provide alternative funding access for MSMEs previously marginalized by formal banking systems. Digital mechanisms accelerate financing approval processes, reduce geographical barriers, and reinforce transactional fairness in accordance with Islamic principles. The clarity of product epistemology particularly through contracts such as murabahah, mudharabah, and qardhul hasan increases user trust and acceptance of fintech services. The study also reveals that transparency features, financial literacy components, and sharia educational tools embedded in the platforms improve users’ understanding of contract structures and risk management. Furthermore, digitalization through cashless payments, automated bookkeeping, and inventory tracking enhances the operational efficiency of MSMEs. However, challenges such as low digital literacy, uneven internet infrastructure, and operational and sharia compliance risks remain obstacles to optimal utilization. Overall, this research affirms that Islamic fintech holds transformative potential in strengthening local economic ecosystems, improving sharia adherence, and fostering more inclusive and sustainable economic development.