Intelligent Machines and Organizational Knowledge Transformation in Bangladesh’s Islamic Banking Sector: Navigating Innovation and Shariah Compliance

Abstract

This study investigates how innovative organizational culture and Shariah compliance frameworks influence the effectiveness of AI-integrated knowledge systems in Bangladesh’s Islamic banking sector. With the rise of intelligent machines, Islamic banks face both opportunities and ethical challenges in aligning AI capabilities with doctrinal governance. The research adopts a qualitative design, utilizing semi-structured interviews with six stakeholders, including innovation leaders, Shariah compliance officers, and AI systems managers. Thematic analysis was conducted using a hybrid coding approach, supported by NVivo software, to uncover how knowledge sharing practices mediate and how workforce digital literacy moderates the transformation of Shariah knowledge processes. Findings reveal that innovation culture, characterized by experimentation support, cross-functional collaboration, and incentive structures, is critical in driving AI adoption. Robust Shariah compliance frameworks—featuring governance maturity, audit transparency, and agile policy updates—ensure doctrinal integrity in AI-generated rulings. Knowledge sharing practices, such as AI-augmented portals and community learning forums, play a key mediating role in disseminating and validating Shariah insights. Meanwhile, workforce digital literacy emerged as a significant moderator, influencing how effectively staff engage with AI systems and apply outputs in practice. Institutions with digital champions and structured training programs showed higher adoption and staff confidence. The study presents a moderated-mediation model that integrates organizational culture, governance, human capacity, and intelligent technology into a unified framework for Shariah knowledge effectiveness. This research contributes to the fields of digital transformation, Islamic corporate governance, and knowledge management by offering an empirically grounded, ethically aligned approach to AI deployment in faith-based financial institutions. It provides strategic guidance for banks, regulators, and scholars navigating the future of Islamic finance.