THE IMPACT OF ISLAMIC FINTECH ADOPTION ON BANKS’ SUSTAINABILITY PERFORMANCE: EVIDENCE FROM ISLAMIC BANKING INSTITUTIONS IN KHYBER PAKHTUNKHWA, PAKISTAN

Abstract

This research aims to examine the effect of Islamic FinTech adoption on the sustainability performance of banks in Islamic banking institutions in the Khyber Pakhtunkhwa, Pakistan. Based on the Ecological Modernization Theory (EMT) and the Dynamic Capabilities Theory (DCT), the study looks at the role of the digital financial innovation in the economy, the environment, and the social sustainability. A cross-sectional quantitative research design is applied; where data is collected from manages and employees of Islamic Banks (N=280) with the help of a structured questionnaire and analyzed with PLS-SEM application in SmartPLS. The results indicate the a significant favorable impact of the Islamic FinTech adoption on the three-fold sustainability performance dimensions. This shows the effect of technology in boosting efficiency, inclusivity, and environmental responsibility. The research offers valuable theoretical and managerial implications, which focus on the relevance of ethical and technology-based approaches that encourage sustainable development of Islamic finance. Findings build the knowledge on the transformative nature of FinTech to attain sustainable banking in the emerging economies.