THE ROLE OF DIGITAL INNOVATIONS IN IMPROVING ISLAMIC BANKING SERVICES

This thesis offers a conceptual analysis of the role of digital innovations — mobile banking, fintech platforms, blockchain-based smart contracts, artificial intelligence, open banking and digital identification — in improving Islamic banking services, with particular reference to Uzbekistan. On 27 March 2026, Uzbekistan adopted its first law introducing Islamic banking activity (Law No.OʻRQ-1126), creating a dual banking system in which Islamic banks, Islamic windows and Islamic microfinance institutions may operate alongside conventional banks. The findings show that digital tools reduce the monitoring costs of profit-and-loss sharing contracts, enhance the transparency of asset-backed transactions, and extend financial inclusion to population segments that have avoided interest-based banking for religious reasons. The thesis identifies key opportunities and risks for Uzbekistan and proposes practical recommendations.