An examination of credit assessment procedures in Islamic banks
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Background of the Study
Technological readiness is a critical factor in determining the success of digital transformation in Islamic financial institutions. As these institutions strive to compete in a rapidly evolving global financial market, the ability to adopt and integrate advanced digital technologies becomes paramount (Oluwaseun, 2023). Technological readiness encompasses not only the availability of state-of-the-art infrastructure and digital tools but also the capacity of an organization’s workforce to effectively utilize these resources. Islamic financial institutions face unique challenges due to the dual imperative of adhering to Shariah principles while modernizing their operations.
Many Islamic banks have begun to invest in digital platforms that facilitate core banking operations, risk management, and customer engagement. However, the level of technological readiness varies significantly across institutions. Factors such as IT infrastructure, staff digital literacy, and leadership commitment to technology play crucial roles in determining readiness (Ibrahim, 2024). Digital readiness also affects the institution’s ability to develop innovative products and offer efficient services, thereby influencing market penetration and overall competitiveness (Adeleke, 2025).
This study appraises the technological readiness of Islamic financial institutions by examining current infrastructure, staff capabilities, and strategic priorities. It explores how readiness levels impact the adoption of digital solutions and the delivery of Islamic banking services, ultimately affecting organizational performance and customer satisfaction.
Statement of the Problem
Despite increasing investments in digital technologies, many Islamic financial institutions face significant challenges regarding technological readiness. A primary problem is the disparity in IT infrastructure across institutions, where outdated legacy systems hinder the adoption of modern digital solutions (Chinwe, 2023). Additionally, insufficient staff training and low digital literacy levels limit the effective utilization of available technologies. Leadership commitment to digital innovation varies widely, further contributing to inconsistent readiness levels (Ogunleye, 2024).
Moreover, the high costs associated with upgrading systems and integrating new technologies create financial constraints, especially for smaller institutions. These challenges result in a gap between the potential benefits of digital transformation and the actual performance improvements achieved by Islamic financial institutions, ultimately affecting service quality and market competitiveness (Ibrahim, 2024).
Objectives of the Study
• To assess the current level of technological readiness in Islamic financial institutions.
• To identify key barriers to digital adoption and integration.
• To propose strategies to enhance IT infrastructure, staff training, and leadership commitment.
Research Questions
• How prepared are Islamic financial institutions to adopt advanced digital technologies?
• What are the main barriers to achieving high technological readiness?
• What strategies can improve digital readiness and overall performance?
Research Hypotheses
• H1: Higher levels of technological readiness are positively correlated with successful digital transformation.
• H2: Inadequate IT infrastructure and low digital literacy negatively affect technological readiness.
• H3: Strategic investments in training and leadership support improve technological readiness.
Scope and Limitations of the Study
This study focuses on a sample of Islamic financial institutions. Limitations include limited access to internal IT assessment data and differences in institutional size and resources.
Definitions of Terms
• Technological Readiness: The capacity of an organization to adopt and integrate new digital technologies.
• Digital Transformation: The process of incorporating digital technology into all areas of business.
• Digital Literacy: The ability of employees to effectively use digital tools.
• IT Infrastructure: The composite hardware, software, and network resources of an institution.
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