Reconfiguring asset-based finance through digitalization, sharia governance, and financial inclusion in the pawnshop bullion sector

Abstract

Background: Asset-based financial institutions, particularly pawnshops and bullion service providers, play a strategic role in Indonesia’s financial system by delivering collateral based and Sharia compliant liquidity to underserved populations. However, despite rapid digital expansion, these institutions remain structurally dependent on short-term liquidity cycles, as digitalization, Islamic governance, and financial inclusion are often implemented in parallel rather than as an integrated system. Methods: This study employs a qualitative multiple case design using semi structured interviews, institutional document analysis, and process tracing across pawnshop, bullion, and hybrid Sharia-based institutions. Findings: The findings show that more than 83% of financing remains transaction oriented, while digital gold services contribute less than 2% of total gold volume. Approximately 60–65% of customers repeatedly pawn assets within three months, indicating structural dependence on short-term liquidity. However, pilot institutions that integrate digital gold savings as a default service pathway reduce repeat pawning by 12–18% and increase customer lifetime value by 1.6–2.1 times. These results suggest that digitalization can shift from operational support to value creation when embedded within institutional design. Conclusion: Sustainable financial inclusion emerges only when digital infrastructure and Sharia governance are embedded into the core business model rather than treated as complementary functions. Novelty/Originality of this article: This study proposes an integrated institutional reconfiguration framework that positions digitalization and Sharia governance as value orchestrating mechanisms for long-term financial inclusion.