The development of financial technology has created new opportunities to expand financial inclusion and support the growth of micro, small, and medium enterprises (MSMEs), including within the Islamic financial sector. Islamic fintech integrates digital innovation with Sharia principles, emphasizing fairness, transparency, contractual clarity, and the avoidance of prohibited transactions. This study aims to analyze the role of Islamic fintech in promoting financial inclusion, supporting MSME empowerment, and identifying challenges to its sustainable development in Indonesia. The research employs a qualitative approach using a literature review method, drawing on relevant scholarly articles, academic books, institutional publications, and regulatory documents. The collected literature is analyzed descriptively through thematic classification and synthesis. The findings indicate that Islamic fintech has the potential to broaden access to financial services, provide alternative financing opportunities for MSMEs, and improve transaction efficiency. However, these benefits depend on several supporting factors, including financial and digital literacy, public trust, Sharia compliance, data security, regulatory oversight, and consumer protection. The study further highlights that technological innovation alone does not guarantee equitable financial access or sustainable business development. Therefore, Islamic fintech providers, regulators, and educational institutions should strengthen transparent service delivery, Sharia governance, financial education, and responsible financing practices. These measures are expected to enhance the contribution of Islamic fintech to an inclusive, ethical, and sustainable digital economy in Indonesia.
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Tarigan et al. (2026) studied this question.
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