The Impact of Digital Risk Management on Islamic Innovative Banking Services: Mediation-Moderation Effects

Purpose: This research intends to explore the relationships between digital risk management practices and the successful implementation of innovative banking services with moderation effect of digital capabilities and moderation effect of digital culture. Methodology Approach: In this study, the data was gathered using a quantitative approach and the cross-sectional survey method with responses from participants who were chosen as the unit of analysis of being investigated for the study. Islamic finance institutions in Jordan were used as the unit of analysis in this study. Responses of different Islamic finance institutions were surveyed in a structured manner to collect data. The current study then used a structural equation modeling using SmartPLS to investigate the relationship between the variables. Findings: The results show that utilizing digital risk management advanced analytics artificial intelligence and automated compliance systems is essential to fostering innovation while upholding Shariah compliance. The study also shows that efficient digital risk management boosts users confidence increases service effectiveness and facilitates the launch of cutting-edge Shariah-compliant products. The findings reveal meditation and moderation significant effect of digital capabilities and digital culture respectively among between digital risk management and innovative banking services. Originality: By investigating digital risk management in the particular context of Islamic innovative banking services, this study provides novel insight. In contrast to earlier research that focuses on innovation in Islamic finance or digital risk management in conventional banking independently this paper examines how digital risk management frameworks impact the creation governance and sustainability of innovative banking services that adhere to Shariah.