Mohd Naufal Mohd Tarmizi, Ahmad Hidayat Buang, Mohd Zaidi Daud

ISLAMIC CORE BANKING SYSTEM: A QUALITATIVE ANALYSIS ON THE PRACTICES AND IMPORTANCE OF ITS DEVELOPMENT

  • General Medicine
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Core banking system is a back-end system that processes daily banking activities. Its offer convenience for Islamic banking institutions to conduct their daily Islamic banking activities in line with the development of today’s technology. Core banking system shall be a tool for Shariah compliancy in Malaysia’s Islamic banking legal framework in tandem with the issuance of Shariah contract policy documents by Central Bank of Malaysia since the promulgation of Islamic Financial Services Act 2013. Thus, the objective of this study is to examine existing practices on its development. Based on the textual study and interviews methodologies, this study found that there are five different approaches in developing Islamic core banking system. Analysis also found that the vendors positioned the Shariah contract as a dedicated module in their Islamic core banking system or being treated as a fundamental for operationalizing Islamic core banking system. Based on the findings, this article explains the importance of developing Shariah contract based core banking system that could lessen the risk of Shariah non-compliance.

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