ASSESSING THE FEASIBILITY OF ISLAMIC BANKING ROBO-ADVISORS ADOPTION WITHIN THE ASEAN ECONOMIC COMMUNITY: EVIDENCE FROM INDONESIA
DOI:
https://doi.org/10.22452/syariah.vol33no3.1Keywords:
Islamic banking, artificial intelligence, robo-advisors, digital finance, ASEAN Economic CommunityAbstract
The ASEAN Economic Community (AEC) aims to enhance regional financial integration and competitiveness, creating opportunities for digital innovation in Islamic banking. Within ASEAN, Indonesia serves as one of the principal hubs of Islamic finance, offering regulatory leadership, market depth, and support for Shariah-compliant financial development. In this context, robo-advisors (RA) have significant potential to expand Islamic investment services through scalable, data-driven, and cost-efficient advisory models. Despite fintech growth, empirical research on RA adoption in Islamic banking within ASEAN remains limited, especially in leading jurisdictions. This study addresses this gap by assessing the feasibility of RA adoption within the AEC, particularly in Indonesia. Using a qualitative design, it conducts systematic library research of academic literature, policy documents, and industry reports on Islamic banking, fintech, and ASEAN financial integration. Data are analysed via thematic analysis supported by NVivo 15 to identify key feasibility dimensions. The findings highlight four interrelated dimensions: regulatory preparedness, Shariah governance and compliance, technological readiness, and customer acceptance. While Indonesia shows growing institutional commitment and market potential, challenges persist in regulatory harmonisation, Shariah-compliant algorithm transparency, and uneven technological capacity. Malaysia’s established regulatory clarity and Shariah governance provide benchmarks for regional best practices. This study proposes a conceptual feasibility framework to guide RA implementation in Indonesian Islamic banking and offers policy and strategic insights for strengthening ASEAN’s Islamic fintech ecosystem, particularly in its leading Islamic finance hubs.
Downloads
References
Abbas, Kausar, and Muhammad Hafeez. “Will Artificial Intelligence rejuvenate Islamic finance? a version of world academia.” Hitit İlahiyat Dergisi 20, no. 3 (2021): 311–24. https://doi.org/10.14395/hid.931401.
Abdullah, Othman, Amir Shaharuddin, Muhamad Azhari Wahid, and Mohd Shukor Harun. “AI Applications for Fiqh Rulings in Islamic Banks: Sharīʿah Committee Acceptance.” SRA International Journal of Islamic Finance (IJIF) 16, no. 1 (2024): 111–26.
Adznan, Syaima, Soliha Sanusi, Hafizah Omar Zaki, Mohamed Mahees Raheem, and Edib Smolo. “Islamic Banking and the Fourth Industrial Revolution: The Current Application, Adoption, and Future Challenges of Artificial Intelligence.” In The Future of Islamic Finance, edited by Edib Smolo and Mohamed Mahees Raheem. Emerald Publishing Limited, 2024. https://doi.org/10.1108/978-1-83549-906-120241013.
Alam, Azim Fairus, and Didi Achjari. “Analisis keberlanjutan penggunaan Robo Advisor di Indonesia.” ABIS: Accounting and Business Information Systems Journal 12, no. 2 (2024). https://doi.org/10.22146/abis.v12i2.96479.
Au, Cam-Duc, Lars Klingenberger, Martin Svoboda, and Eric Frère. “Business Model of Sustainable Robo-Advisors: Empirical Insights for Practical Implementation.” Sustainability 13, no. 23 (2021): 13009. https://doi.org/10.3390/su132313009.
Aw, Eugene Cheng-Xi, Lai-Ying Leong, Jun-Jie Hew, Nripendra P. Rana, Teck Ming Tan, and Teck-Weng Jee. “Counteracting Dark Sides of Robo-Advisors: Justice, Privacy and Intrusion Considerations.” International Journal of Bank Marketing 42, no. 1 (2024): 133–51. https://doi.org/10.1108/IJBM-10-2022-0439.
Baidhowi, Baidhowi. “Sharia Banking Opportunities and Challenges in the Digital Era.” Paper presented at 1st International Conference on Indonesian Legal Studies (ICILS 2018), Semarang, Indonesia. Proceedings of the 1st International Conference on Indonesian Legal Studies (ICILS 2018), 2018. https://doi.org/10.2991/icils-18.2018.30.
Barile, Domenica, Giustina Secundo, and Candida Bussoli. “Exploring Artificial Intelligence Robo-Advisor in Banking Industry: A Platform Model.” Management Decision, ahead of print, April 25, 2024. https://doi.org/10.1108/MD-08-2023-1324.
Bawana, Tate Agape. “The Contribution of Profit and Loss Sharing (PLS) Financing for MSMEs of ASEAN Member States in the New Normal Post-Covid 19.” Journal of Global and Area Studies 5, no. 1 (2021): 43–62.
Bawana, Tate Agape, Fadillah Mansor, and Kamaruzaman Noordin. “International Islamic Banks’ Popularity amidst the ASEAN Economic Community: Insights from Indonesia and Malaysia.” Journal of Central Banking Law and Institutions 3, no. 3 (2024): 471–94. https://doi.org/10.21098/jcli.v3i3.269.
Bhatia, Ankita, Arti Chandani, and Jagriti Chhateja. “Robo Advisory and Its Potential in Addressing the Behavioral Biases of Investors — A Qualitative Study in Indian Context.” Journal of Behavioral and Experimental Finance 25 (March 2020): 100281. https://doi.org/10.1016/j.jbef.2020.100281.
Bhatia, Ankita, Arti Chandani, Rajiv Divekar, Mita Mehta, and Neeraja Vijay. “Digital Innovation in Wealth Management Landscape: The Moderating Role of Robo Advisors in Behavioural Biases and Investment Decision-Making.” International Journal of Innovation Science 14, no. 3/4 (2022): 693–712. https://doi.org/10.1108/IJIS-10-2020-0245.
Brill, T. M, L Munoz, and R. J Miller. “Siri, Alexa, and Other Digital Assistants: A Study of Customer Satisfaction with Artificial Intelligence Applications.” Journal of Marketing Management 35, nos. 15–16 (2019): 1401-1436. https://doi.org/10.1080/0267257X.2019.1687571.
Cardillo, Giovanni, and Helen Chiappini. “Robo-Advisors: A Systematic Literature Review.” Finance Research Letters 62 (April 2024): 105119. https://doi.org/10.1016/j.frl.2024.105119.
Chen, Kevin. “Financial Innovation and Technology Firms: A Smart New World with Machines.” In International Symposia in Economic Theory and Econometrics, vol. 25, edited by William A. Barnett and Bruno S. Sergi. Emerald Publishing Limited, 2018. https://doi.org/10.1108/S1571-038620180000025012.
Cheng, Yung-Ming. “How Can Robo-Advisors Retain End-Users? Identifying the Formation of an Integrated Post-Adoption Model.” Journal of Enterprise Information Management 36, no. 1 (2023): 91–122. https://doi.org/10.1108/JEIM-07-2020-0277.
Cheng, Yung-Ming. “Will Robo-Advisors Continue? Roles of Task-Technology Fit, Network Externalities, Gratifications and Flow Experience in Facilitating Continuance Intention.” Kybernetes 50, no. 6 (2021): 1751–83. https://doi.org/10.1108/K-03-2020-0185.
Chou, Szu-Yu, Chih-Wei Lin, Yi-Chun Chen, and Jyh-Shen Chiou. “The Complementary Effects of Bank Intangible Value Binding in Customer Robo-Advisory Adoption.” International Journal of Bank Marketing 41, no. 4 (2023): 971–88. https://doi.org/10.1108/IJBM-08-2022-0392.
Deng, Liurui, Yongbin Lv, Ye Liu, and Yiwen Zhao. “Impact of Fintech on Bank Risk-Taking: Evidence from China.” Risks 9, no. 5 (2021): 99. https://doi.org/10.3390/risks9050099.
Dong, Z.L, M.X Xhu, and F.M Xu. “Robo-Advisor Using Closed-Form Solutions for Investors’ Risk Preferences.” Applied Economics Letters 29, no. 16 (2021): 1470–77.
Eren, Berrin Arzu. “Antecedents of Robo-Advisor Use Intention in Private Pension Investments: An Emerging Market Country Example.” Journal of Financial Services Marketing 29, no. 3 (2024): 683–98. https://doi.org/10.1057/s41264-023-00229-5.
Fatima, Shumaila, and Madhumita Chakraborty. “Adoption of Artificial Intelligence in Financial Services: The Case of Robo-Advisors in India.” IIMB Management Review 36, no. 2 (2024): 113–25. https://doi.org/10.1016/j.iimb.2024.04.002.
Flavián, Carlos, Alfredo Pérez-Rueda, Daniel Belanche, and Luis V. Casaló. “Intention to Use Analytical Artificial Intelligence (AI) in Services – the Effect of Technology Readiness and Awareness.” Journal of Service Management 33, no. 2 (2022): 293–320. https://doi.org/10.1108/JOSM-10-2020-0378.
Hana Bank. Hana Bank Launches Hana AIdvisor Feature - the First Bank in Indonesia to Use the Robo Advisor Feature. Banking website. 2023. https://www.hanabank.co.id/about/news/hana-bank-launches-hana-aidvisor-feature-the-first-bank-in-indonesia-to-use-the-robo-advisor-feature.
Hentzen, Janin Karoli, Arvid Hoffmann, Rebecca Dolan, and Erol Pala. “Artificial Intelligence in Customer-Facing Financial Services: A Systematic Literature Review and Agenda for Future Research.” International Journal of Bank Marketing 40, no. 6 (2022): 1299–336. https://doi.org/10.1108/IJBM-09-2021-0417.
Hodge, F.D, K.I Mendoza, and R.K Sinha. “The Effect of Humanizing Robo-Advisors on Investor Judgments.” Contemporary Accounting Research 38, no. 1 (2021): 770–92.
Horn, Matthias, and Andreas Oehler. “Automated Portfolio Rebalancing: Automatic Erosion of Investment Performance?” Journal of Asset Management 21, no. 6 (2020): 489–505. https://doi.org/10.1057/s41260-020-00183-0.
Isaia, Eleonora, and Noemi Oggero. “The Potential Use of Robo-Advisors among the Young Generation: Evidence from Italy.” Finance Research Letters 48 (August 2022): 103046. https://doi.org/10.1016/j.frl.2022.103046.
Ishak, N, and R. C. C Jiun. “Cyclical Industries’ Stock Performance Reaction during Covid-19: A Systematic Literature Review.” Jurnal Ekonomi Malaysia 55, no. 1 (2021): 147–58. https://doi.org/10.17576/JEM-2021-5501- 11.
Joseph, C, J. T Janang, S. N. S Yusuf, and M Rahmat. “Factors Influencing Corporate Ethical Values Disclosures: A Systematic Literature Review.” International Journal of Business and Society 24, no. 1 (2023): 219–36. https://doi.org/10.33736/ijbs.5613.2023.
Jung, D, V Dorner, C Weinhardt, and H Pusmaz. “Designing a Robo-Advisor for Risk-Averse, Low-Budget Consumers.” Electronic Markets 28, no. 3 (2018): 367-380.
Karthikeyan, P. “Technology Adoption and Customer Satisfaction in Banking Technological Services.” Journal of Internet Banking and Commerce 21, no. 3 (2016): 1.
Kasim, R.S.R. “A Smart Shariah-Based Decision-Making in Islamic Fintech.” Paper presented at The 10th International Islamic Economic System Conference, Malaysia. The 10th International Islamic Economic System Conference, 2023.
Kurniawan, S, A Purnama, B. D. J Santoso, L Herawaty, M Listiana, and O. D. P Sari. “Development of MSMEs with Financial Technology in the Society Era 5.0: Digital Financial Literacy, Digital Wallet, Digital Accounting.” Riau International Conference on Economic Business and Accounting (RICEBA), 1, vol. 1 (2024): 11–20.
Leow, E.K.W, B.P Nguyen, and M.C.H Chua. “Robo-Advisor Using Genetic Algorithm and BERT Sentiments from Tweets for Hybrid Portfolio Optimization.” Expert Systems with Applications 179 (2021): 1–9.
Litimi, H, A BenSa¨ıda, and M. M Raheem. “Impact of FinTech Growth on Bank Performance in GCC Region.” Journal of Emerging Market Finance 23, no. 2 (2023). https://doi.org/10.1177/09726527231218423.
Lourenço, C.J.S, B.G.C Dellaert, and B Donkers. “Whose Algorithm Says so: The Relationships between Type of Firm, Perceptions of Trust and Expertise, and the Acceptance of Financial Robo_advice.” Journal of Interactive Marketing 49 (2020): 107–1.
Misman, Faridah Najuna, and M. Ishaq Bhatti. “The Determinants of Credit Risk: An Evidence from ASEAN and GCC Islamic Banks.” Journal of Risk and Financial Management 13, no. 5 (2020): 89. https://doi.org/10.3390/jrfm13050089.
Narpati, Bintang. “The Role of Digital Transformation in Facing the Era of Society 5.0 at Banking Industry.” Jurnal Valuasi: Jurnal Ilmiah Ilmu Manajemen Dan Kewirausahaan 3, no. 1 (2023): 1–12.
Nguyen, Duc Khuong, Georgios Sermpinis, and Charalampos Stasinakis. “Big Data, Artificial Intelligence and Machine Learning: A Transformative Symbiosis in Favour of Financial Technology.” European Financial Management 29, no. 2 (2023): 517–48. https://doi.org/10.1111/eufm.12365.
Nguyen, Thi Phuong Lan, Li Woon Chew, Saravanan Muthaiyah, Boon Heng Teh, and Tze San Ong. “Factors Influencing Acceptance of Robo-Advisors for Wealth Management in Malaysia.” Cogent Engineering 10, no. 1 (2023): 2188992. https://doi.org/10.1080/23311916.2023.2188992.
Nguyen, Thi Phuong Lan, Li Woon Chew, Saravanan Muthaiyah, Boon Heng Teh, and Tze San Ong. “Factors Influencing Acceptance of Robo-Advisors for Wealth Management in Malaysia.” Cogent Engineering 10, no. 1 (2023): 2188992. https://doi.org/10.1080/23311916.2023.2188992.
Nicolleti, Bernardo. Banking 5.0: How Fintech Will Change Traditional Banks in the “New Normal” Post Pandemic. 1st ed. Springer, 2021.
Northey, Gavin, Vanessa Hunter, Rory Mulcahy, Kelly Choong, and Michael Mehmet. “Man vs Machine: How Artificial Intelligence in Banking Influences Consumer Belief in Financial Advice.” International Journal of Bank Marketing 40, no. 6 (2022): 1182–99. https://doi.org/10.1108/IJBM-09-2021-0439.
Northey, Gavin, Vanessa Hunter, Rory Mulcahy, Kelly Choong, and Michael Mehmet. “Man vs Machine: How Artificial Intelligence in Banking Influences Consumer Belief in Financial Advice.” International Journal of Bank Marketing 40, no. 6 (2022): 1182–99. https://doi.org/10.1108/IJBM-09-2021-0439.
Nourallah, Mustafa. “One Size Does Not Fit All: Young Retail Investors’ Initial Trust in Financial Robo-Advisors.” Journal of Business Research 156 (February 2023): 113470. https://doi.org/10.1016/j.jbusres.2022.113470.
Nourallah, Mustafa, Peter Öhman, and Muslim Amin. “No Trust, No Use: How Young Retail Investors Build Initial Trust in Financial Robo-Advisors.” Journal of Financial Reporting and Accounting 21, no. 1 (2023): 60–82. https://doi.org/10.1108/JFRA-12-2021-0451.
Nurlaily, Wulandari. “Analysis of the Effectiveness of Islamic Banks in Indonesia Period 2010-2019.” SHS Web of Conferences, 2022.
Orzeszko, Witold, and Dariusz Piotrowski. “Prediction of Robo-Advisory Acceptance in Banking Services Using Tree-Based Algorithms.” PLOS ONE 19, no. 5 (2024): e0302359. https://doi.org/10.1371/journal.pone.0302359.
Othman, Norfaizah, Mariani Abdul-Majid, and Aisyah Abdul-Rahman. “Determinants of Banking Crises in ASEAN Countries.” Journal of International Commerce, Economics and Policy 09, no. 03 (2018): 1850009. https://doi.org/10.1142/S1793993318500096.
Park, J.Y, J.P Ryu, and H.J Shin. “Robo Advisors for Portfolio Management.” Advanced Science and Technology Letters 141 (2016): 104–8.
Piotrowski, Dariusz, and Witold Orzeszko. “Artificial Intelligence and Customers’ Intention to Use Robo-Advisory in Banking Services.” Equilibrium. Quarterly Journal of Economics and Economic Policy 18, no. 4 (2023): 967–1007. https://doi.org/10.24136/eq.2023.031.
Putra, Juniawan Mandala, Erlina Puspitaloka Mahadewi, Reza Fahlevi, Arnastya Iswara Sanantagraha, and Ahmad Sopyan. “Fintech Transformation: An Analysis of Era 5.0 Technology in Digital Finance Applications.” Seascapeid Journal of Economics, Management, and Business 1, no. 9 (2024): 1–11.
Rachman, Kevin Mulia, and Citra Sukmadilaga. “Influence of Robo Advisory in Investment Decision: A Case Study in Indonesian Mutual Fund Market.” Journal of Digital Innovation Studies 1, no. 1 (2022): 1–20. https://doi.org/10.24198/digits.v1i1.37806.
Rahayu, N Fauziah Aulia, and D Fitrisia Septiarini. “Comparative Analysis of Islamicity Performance Index in ASEAN Islamic Banks in 2011 - 2016 Period (a Case Study on Indonesia, Malaysia, Brunei Darussalam, and Thailand).” KnE Social Sciences 3, no. 13 (2019): 362. https://doi.org/10.18502/kss.v3i13.4216.
Riza, Alex Fahrur, and Dwi Marlina Wijayanti. “Strengthening a Sustainable Islamic Financial Industry through Digital Banking.” Journal of Islamic Marketing 15, no. 11 (2024): 2732–58. https://doi.org/10.1108/JIMA-01-2023-0025.
Sa’ad, A.A, S.M Alhabshi, A.M Noor, and R Hassan. “Robo-Advisory for Islamic Financial Institutions: Shari’ah and Regulatory Issues.” European Journal of Islamic Finance, no. First Special Issue for EJIF Workshop (2020).
Safitri, Della, Fitria Amelia, and Mutia Yuarni. “Investasi Berbasis Syariah Melalui Aplikasi Bibit.” Jurnal Religion: Jurnal Agama, Sosial, Dan Budaya 2, no. 5 (2023).
Salman, Kautsar Riza, Entis Sutisna, Jana Siti Nor Khasanah, and Adolf Z.D. Siahay. “The Effect of the COVID-19 Pandemic on Profitability Performance and Maqashid Sharia Performance in Islamic Commercial Banks in the ASEAN Region.” Banks and Bank Systems 19, no. 3 (2024): 80–90. https://doi.org/10.21511/bbs.19(3).2024.08.
Seiler, Volker, and Katharina Maria Fanenbruck. “Acceptance of Digital Investment Solutions: The Case of Robo Advisory in Germany.” Research in International Business and Finance 58 (December 2021): 101490. https://doi.org/10.1016/j.ribaf.2021.101490.
Serang, Adrian Eka Darma. “Banking Digitalization in the Era of Revolution 5.0: Opportunities and Risks for Financial Inclusion.” Nomico 1, no. 9 (2024): 13–23. https://doi.org/10.62872/x3ta4h52.
Shiva, Atul, Bijay Prasad Kushwaha, and Bikramjit Rishi. “A Model Validation of Robo-Advisers for Stock Investment.” Borsa Istanbul Review 23, no. 6 (2023): 1458–73. https://doi.org/10.1016/j.bir.2023.09.005.
So, Mike K. P. “Robo-Advising Risk Profiling through Content Analysis for Sustainable Development in the Hong Kong Financial Market.” Sustainability 13, no. 3 (2021): 1306. https://doi.org/10.3390/su13031306.
Subramanian, Ulaganathan, Ahmed Nazri Wahidudin, and Pg. Abd. Mutalib Pg. Kamaluddin. “Determinants of Profitability – A Comparative Analysis of Islamic Banks and Conventional Banks in ASEAN Countries.” Journal of Engineering and Applied Sciences 12, no. 5 (2017): 1245–49. https://doi.org/10.2139/ssrn.2251602.
Sukmana, Yoga. “Hana Bank Has AIdvisor Feature, What Are the Benefits for Customers?” News Website. Kompas.Com, August 22, 2023. https://money.kompas.com/read/2023/08/22/155718426/bank-hana-punya-fitur-aidvisor-apa-manfaatnya-untuk-nasabah.
Suripto, Arif Sugiono, and Havid Dasuki. “Comparing the Resilience of Sharia and Conventional Banking to the Financial Crisis in the Association of Southeast Asian Nations.” Banks and Bank Systems 18, no. 3 (2023): 192–204. https://doi.org/10.21511/bbs.18(3).2023.16.
Suryasnia, Sofi, and Ina Primiana. “Banking Strategy and Implementation of Banking ASEAN Integration Framework ( ABIF ) in ASEAN Economic Community (AEC)’S Era 2020.” Munich Personal RePEc Archive 1, no. 1 (2016): 1–18.
Tao, Ren, Chi-wei Su, Yidong Xiao, Ke Dai, and Fahad Khalid. “Robo Advisors, Algorithmic Trading and Investment Management: Wonders of Fourth Industrial Revolution in Financial Markets.” Technological Forecasting and Social Change 163 (2021).
Wang, Xuhui, Asad Hassan Butt, Qilin Zhang, Hassan Ahmad, and Muhammad Noman Shafique. “Intention to Use AI-Powered Financial Investment Robo-Advisors in the M-Banking Sector of Pakistan:” Information Resources Management Journal 34, no. 4 (2021): 1–27. https://doi.org/10.4018/IRMJ.2021100101.
Wexler, M.N, and J Oberlander. “Robo-Advisors (RAs): The Programmed Self-Service Market for Professional Advice.” Journal of Service Theory and Practice 31, no. 3 (2021): 351–65.
Xia, Huosong, Qian Zhang, Justin Zuopeng Zhang, and Leven J. Zheng. “Exploring Investors’ Willingness to Use Robo-Advisors: Mediating Role of Emotional Response.” Industrial Management & Data Systems 123, no. 11 (2023): 2857–81. https://doi.org/10.1108/IMDS-07-2022-0400.
Zhang, L, I Pentina, and Y Fan. “Who Do You Choose? Comparing Perceptions of Human vs Robo-Advisor in the Context of Financial Services.” Journal of Services Marketing 35, no. 5 (2021): 628–64.
Zhu, Hui, Olli Vigren, and Inga-Lill Söderberg. “Implementing Artificial Intelligence Empowered Financial Advisory Services: A Literature Review and Critical Research Agenda.” Journal of Business Research 174 (March 2024): 114494. https://doi.org/10.1016/j.jbusres.2023.114494.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Jurnal Syariah
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
COPYRIGHT: All rights reserved. Not allowed to be reproduced any part of articles and contents of this journal in any form or by any way, whether electronic, mechanical, photocopying, recording or otherwise without permission in writing from the Chief Editor, Jurnal Syariah.
