DIGITAL TRANSFORMATION AND RISK MANAGEMENT IN ISLAMIC BANKS: AN ISLAMIC INFORMATION TECHNOLOGY-BASED APPROACH AMIDST THE CHALLENGES OF THE INDUSTRY 4.0 ERA

Digital transformation in the era of Industry 4.0 has brought major changes to the Islamic financial system, especially in how Islamic banks utilize technologies such as process automation, big data, artificial intelligence (AI), fintech, and blockchain. This transformation is not only about digital banking, but also includes overhauling core information systems, implementing data analytics, modernizing organizational structures, and integrating maqasid al-syariah values into technology design. Although it offers great opportunities in terms of increased efficiency, financial inclusion, and service responsiveness, digitization also poses operational risks, cybersecurity risks, low digital literacy, and the risk of sharia non-compliance. The research in this file uses a qualitative approach based on literature studies to describe how Islamic banks can manage digital risks through technology strengthening, digital transformation strategies, and the implementation of IT-based sharia governance. The results of the study show that the appropriate use of technology can accelerate service innovation, improve operational efficiency, and strengthen the risk management system of Islamic banks while maintaining Sharia compliance.