Mahdi Yazdizadeh, CEO of Ereele Capital, PE and VC investor focused on the MENA Market.
Islamic trade finance (ITF), a sector powering over $2 trillion in annual trade flows, is entering its AI era. From compliance to risk assessment, artificial intelligence is automating the manual, time-consuming processes that have long slowed trade finance. With AI expected to add $320 billion to the Middle East GDP by 2030, ITF is poised to harness this technology for faster, more transparent and more Shariah-compliant transactions.
We have witnessed how AI has significantly reduced the time and cost of processes like onboarding from days to hours. However, when it comes to adherence to Islamic law, the progress has been less convincing. In reviewing some contracts, we have noticed that while AI could process documentation quickly, it often failed to distinguish between riba-based structures and true profit-sharing arrangements.
AI’s First Steps In Islamic Trade Finance
Leading Islamic banks are already deploying AI. Dubai Islamic Bank uses AI-driven systems to scan disclosures and media for signs of riba (interest) or gharar (excessive uncertainty), reducing compliance reviews from days to hours. Bahrain Islamic Bank created a platform embedding 1,800-plus Shariah rulings, giving customers real-time access to fatwas.
Fintechs are also applying machine learning to pre-screen SMEs for Shariah compliance before loan applications, accelerating access to Islamic financing.
The Challenge With Generic Models
While AI adoption in ITF has accelerated, there remain significant limitations. Generic AI models, which are often trained on vast datasets from diverse industries, can fail to grasp the complexities and nuances of Islamic finance.
For instance, in a 2025 study, researchers evaluated AI-generated definitions against the AAOIFI standards, the benchmark for Shariah-compliant finance. They found that 93.75% of the AI-generated outputs were inconsistent with Islamic law, underscoring that general AI models trained on nonspecialized data can misinterpret key terms.
Moreover, another 2025 study found that AI systems, when not trained with Shariah-specific content, may miss subtle differences between Islamic schools of thought. This can lead to significant gaps in compliance, especially when dealing with complex trade finance structures.
These findings illustrate a core issue: While AI shows immense promise, it must be tailored to the unique legal, operational and doctrinal specifics of Islamic finance for it to reach its full potential.
The Power Of Fine-Tuned AI
This is where fine-tuning becomes crucial. By training AI models on Shariah-specific datasets—such as fatwas, AAOIFI guidelines and trade finance contracts—AI can understand not just the broad strokes of Islamic finance, but the finer details that make it unique. This level of specialization empowers AI to:
• Ensure precision in applying Shariah principles across different Islamic schools of thought.
• Recognize the nuances of multistage trade transactions, from Murabaha to Istisna contracts.
• Provide real-time support for structuring deals, validating contracts and assessing compliance risks with Shariah alignment.
The results are faster, more accurate and context-aware decision-making, especially in high-stakes trade finance environments.
Examples Of Domain-Specific AI In Action
Two leading examples of fine-tuned AI in Islamic finance demonstrate its potential:
1. FinAI-BERT-IslamicBanks: Fine-tuned on 855 Islamic bank reports, this model achieved an F1 score of 0.987, outperforming generic AI.
2. RibhAI: Built on proprietary Islamic finance datasets (AAOIFI standards, fatwas and real workflows), RibhAI structures and validates deals in real time, assesses risk and adapts across multiple schools of thought (full disclosure: RibhAI is a partner of Ereele).
These initiatives show that when AI models are trained with the right data, they can become deeply knowledgeable and effective in navigating the complexities of Islamic finance.
The Potential Impact At Scale
The adoption of fine-tuned AI across the Islamic trade finance industry could yield significant benefits, like the following:
Compliance error rate: From 15% to 20% down to 5%
Deal structuring time: From three to five days down to one day
Documentation errors: Decrease of 50%
Processing cost per deal: Decrease of 30%
SME onboarding time: From two to three weeks down to one week
For the International Islamic Trade Finance Corporation (ITFC), which has already facilitated $83 billion in trade financing, these improvements could unlock billions more in funding for underserved businesses.
Governance And Oversight
Despite AI’s advantages, human oversight remains crucial. AAOIFI’s efforts to introduce generative AI training to Islamic financial institutions signal the importance of having Shariah scholars involved in the AI development process. Academic frameworks emphasize embedding the principles of maqāṣid al-Sharīʿah into AI system design, ensuring that AI models serve ethical and legal standards from the outset.
Practical Steps For Finance Leaders
To take action, finance leaders can form a consortium of major Shariah boards to develop fine-tuned AI models trained on their respective standards. This would allow AI not only to verify and suggest Shariah-compliant structures but also to adapt to the specific interpretations of each board, enabling either localized versions of products for different markets or a unified model compatible across jurisdictions.
From Early Adoption To Mastery
The potential for AI in Islamic trade finance is real and measurable. While the early wave of AI tools has demonstrated its value in automating basic tasks, the real leap forward will come from specialized AI models fine-tuned on Shariah-compliant finance data. Fine-tuned systems are already showing the way forward, with AI transforming from a support tool into an essential partner in structuring, validating and managing trade finance deals.
For ITF to truly reach its potential, the industry must focus not just on adopting AI, but on tailoring it to the unique needs of Shariah-compliant finance.
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