From Automation to Ethical Intelligence: The Role of AI in Transforming Digital Services in Islamic Banking

Abstract

In today's world of fast-changing technology, digital transformation is essential for the Islamic banking sector. However, using artificial intelligence (AI) still has challenges, especially in smaller cities. This study examines how AI enhances digital services at the Semarang branch of Bank Syariah Indonesia (BSI), with a focus on adhering to Shariah principles. The research used observations and looked at documents from both employees and customers. The main findings show that AI greatly improves service efficiency through digital tools, a chatbot named "Hasanah Assistant," and an automated transaction system based on templates. This innovation speeds up services while still keeping to the principles of protecting property and life. However, there are some issues, such as AI not fitting well with local culture, some senior staff resisting digital change, and customers having low digital skills. This shows the need for a mix of technology and a more personalized approach in Islamic banking. What makes this study special is that it focuses on regional areas not often studied in academic research. It also helps to understand AI not just as a tool for automation but as a strategic tool. The study suggests that AI systems should be designed in a way that is ethical, inclusive, and based on Islamic values. It proposes a digital transformation plan that fits local values and Sharia Makashid to ensure lasting technology growth in Islamic banking.