DefinePK

Abstract

This research examines the institutional and behavioral drivers of the development of Islamic banks and the implementation of Islamic Financial Technology (Islamic FinTech) in Pakistan. With the increasing expansion of the Islamic financial services sector at the international and domestic levels, it becomes important to recognize the dynamics between financial viability and consumer religion-based conduct (Hassan, 2017; IFSB, 2023). With a mixed-methods design, the study incorporates secondary Islamic banks data (2018-2023) and primary survey data of 300 respondents from urban and semi-urban areas. The AID model is utilized to assess factors in institutional growth and incorporates behavioral theories Technology Acceptance Model (TAM) and Unified Theory of Acceptance and Use of Technology (UTAUT) to test FinTech adoption (Ali et al.,2021; Rahayu et al., 2024). Empirical findings indicate that bank size and capital adequacy are better predictors of Islamic bank growth, whereas trust, religious orientation, and perceived benefit are better predictors of Islamic FinTech adoption. Of significance, regulatory clarity positively moderates the trust-adoption behavior relationship, advocating for clear Sharia governance and regulation of digital finance (Muryanto, 2023; Suswanto et al., 2025) such finding highlight the co-equal significance of institutional resilience and people-oriented trust-establishing approaches towards promoting Islamic finance in Pakistan. This research adds to the literature by suggesting an integrated framework and provides practical recommendations for Islamic banks, FinTech companies, and policymakers seeking to bridge ethical finance and digital innovation.