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This study aims to investigate the pragmatic issues on the radical call for the establishment of an external Shariah auditor (ESA) in the governance framework of Islamic banks (IBs).

From 11 well-established Malaysian IBs, 16 internal auditors were interviewed to provide an in-depth understanding on how ESA can provide greater assurance to stakeholders in Malaysian IBs.

This study reported mixed acceptance from internal auditors on the proposed additional governance layer to be undertaken by the ESA. Generally, internal auditors reluctantly agreed that Shariah auditing by the ESA would enhance the quality of Shariah assurance but maintain several practical concerns regarding lack of guidelines on Shariah auditing, the additional cost to be borne by IBs and the possible tensions between the ESA and Shariah board (SB) amid the diverse Shariah interpretations available for experts in the field.

The critical point on the manifestation of an ESA in the contemporary IB practice brought by this study highlights the need for regulation and policy promulgation that embrace a comprehensive approach to Shariah audit process within the religio-ethical dogma of Islamic banking and the pragmatic approach to banking.

This study provides evidence on the expected role and competency of an ESA and explores the implications produced by its implementation in Malaysian IBs. This study also clarifies how IBs should delineate the role of Shariah assurance from SB to ESA.

This study aims to investigate the significant role of the Shariah Board (SB) in the innovation of digital finance products through SBs’ interaction with financial technology (FinTech).

By using semi-structured interviews, the paper examines 34 views and experiences of scholars and other practitioners from the FinTech and Islamic banking industries to gain an in-depth understanding of SBs’ Shariah compliance roles in FinTech inclusion in Malaysian Islamic banks (IBs).

Taking advantage of Malaysia’s comprehensive Shariah Governance Framework for IBs, the study highlighted the importance of SBs to better address the opportunities and challenges of financial innovation for the development of IBs with the inclusion of FinTech. The authors found that digital solutions and tools, such as Robo Advisory system and blockchain, enhance SBs’ roles by providing more effective and timely Shariah assurance regardless of the volume of data information and storage.

Given SBs significant roles in conforming to the Shariah, the study contributed significantly to assisting the regulatory and policy promulgation that enhance SBs’ integrity and credibility in response to the growth of IB infrastructures and financial innovation.

To the best of the authors’ knowledge, this is the first study to investigate the significant role of SBs in the innovation of digital finance products through their interaction with FinTech, while prior studies focused on the characteristics and structure of Islamic digital financial products.