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Islamic banks should focus on retail segment for growth: Expert
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A bank officer talks to a customer at a Bank Syariah Mandiri branch in Central Jakarta, recently. (The Jakarta Post/Jerry Adiguna)
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slamic banking should focus on the retail segment, in which the customer base has been strong in the last few years, in a bid to create sustainable growth, sharia economy expert Adiwarman Azwar Karim has said.
Despite the small portion of sharia banks’ assets, only 5 percent of that in conventional banks, the number of sharia bank customers is up to 18.5 million or 19 percent of that in conventional banks.
According to Adiwarman, it indicated that most sharia bank customers were from the retail segment. Even with only 18.5 million of customers, he further said, Indonesia had the biggest sharia retail banking in the world.
"As the funds come from the retail segment, the loans should flow back to this segment. Moreover, corporate segment is now sluggish amid global economic conditions," Karim said at a Bank Indonesia (BI) sharia economy seminar in Surabaya on Wednesday.
He acknowledged the fact that working on the retail segment would cost more capital and time as the bank had to open more branches and employ more officers. However, it would be worth it as the segment was well-known for its lower risk and resilience against crisis.
"BRI is a good example. It is a retail-based lender. During an economic slowdown like this, it is stronger compared to corporate banks such as Bank Mandiri," he said. (ags)
