Exploring the Role of Digital Transformation in Sustainability of Islamic Banks: A Systematic Literature Review

Purpose: This study critically interrogates the nexus between digital transformation (DT) and sustainability within Islamic banking, aiming to uncover how emerging technologies catalyze ethical, inclusive, and ESG-aligned financial innovation in developing economies. By contextualizing digital finance within Shariah principles, the review seeks to redefine operational resilience and moral capitalism in the Global South. Design/Methodology/Approach: Employing a rigorous Systematic Literature Review (SLR) grounded in the PRISMA framework, the research synthesizes evidence from 200 peer-reviewed studies (2015–2025). Advanced bibliometric tools, including VOSviewer, are used to map intellectual structures, identify thematic clusters, and reveal citation dynamics shaping this evolving discourse. Findings: Findings reveal that while Islamic banks have embraced digital tools to enhance operational efficiency, financial inclusion, and environmental accountability, substantial challenges remain. These include inconsistent ESG reporting, infrastructural gaps, and limited integration of Shariah-compliant sustainability models. Digital innovations like blockchain and mobile banking offer high promises for ethical governance and green finance but require contextual tailoring. Implications/Originality/Value: This research contributes novel insights by bridging Islamic ethical finance and the digital-sustainability paradigm. It offers a strategic blueprint for regulators, scholars, and financial institutions to recalibrate Islamic banking as a future-ready, inclusive, and digitally native force for socio-economic transformation.