DRIVERS AND CHALLENGES OF ZAKAT INTEGRATION IN DIGITAL BANKING: EVIDENCE FROM PAKISTANI ISLAMIC FINANCIAL INSTITUTIONS

Abstract

Purpose: This study examines the drivers and challenges influencing the integration of Zakat services into digital banking platforms within Islamic financial institutions in Pakistan.

Design/Methodology/Approach: A qualitative multiple case study design was employed. Data were collected through 22 semi-structured interviews across seven Islamic financial institutions, supplemented by documentary analysis. A hybrid deductive inductive thematic analysis was conducted using the Technology Organization Environment (TOE) framework as the guiding analytical lens. Cross-case comparison enabled identification of institutional patterns and variations.

Findings: The findings demonstrate that successful digital Zakat integration requires alignment across technological readiness, organizational capacity, and environmental support. Technological drivers include perceived relative advantage, system compatibility, and secure infrastructure, while challenges involve calculation complexity and cybersecurity risks. Organizational commitment, leadership support, strategic alignment, and Shariah governance engagement significantly influence implementation outcomes. Environmental pressures, including regulatory encouragement and competitive dynamics, further shape adoption decisions. Cross-case analysis reveals systematic variation by institutional type and size, with full-fledged Islamic banks exhibiting stronger integration capabilities than Islamic windows.

Originality/Value: The study contributes empirical evidence on digital Zakat integration within commercial Islamic banking and extends understanding of Fintech adoption in Islamic social finance contexts.