Blockchain Adoption in Family Takaful: Opportunities, Challenges, and Policy Implications for Pakistan

Abstract

The family takaful sector in Pakistan faces challenges in regulatory compliance, payment efficiency, fraud prevention, and transparency. Blockchain technology, which is decentralised and transparent, could address these issues. This study assesses blockchain’s feasibility and impact in Pakistan’s takaful sector, using a Systematic Literature Review (SLR) and case studies from Malaysia, the UAE, and Indonesia. Findings suggest blockchain can streamline operations by automating premium collection and claims through smart contracts, reducing costs and fraud. In Malaysia and the UAE, the success of using blockchain in Islamic finance highlights potential efficiency and security benefits. However, Pakistan’s adoption faces regulatory ambiguity, lack of Shariah-compliant frameworks, limited expertise, and low industry readiness. Overcoming these can lead to sustainable growth in Pakistan’s digital finance sector. Policymakers need to create regulatory sandboxes and Shariah-compliant smart contracts. Takaful operators should pilot projects on claims automation and fraud prevention and increase consumer awareness to boost confidence. Blockchain could enhance trust, efficiency, and inclusion in line with global digital trends.

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