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Sharia banks urged to diversify, improve marketing to capture wider market
An Institute for Development of Economics and Finance (INDEF) economist said sharia banks needed to attract more users by diversifying products.
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Money counts: A teller counts money at a Mandiri Syariah branch in Menteng, Central Jakarta. Sharia banks face a lack of risk culture in competing with conventional banks. (Antara/Audy Alwi)
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conomists urged sharia banks to diversify and better market their products to widen the market cap of the banks, which has stagnated for years, amid the country’s aim to be a sharia finance hub.
Institute for Development of Economics and Finance (INDEF) sharia economy expert Fauziah Rizki Yuniarti said sharia banks needed to attract more users by diversifying products to level with the conventional banks. Even the halal industry had yet to use sharia banks’ products, as they deemed the products unsuitable for their needs, she added.
“People have low confidence in sharia banks’ sharia compliance. Some of their products are also not as attractive as those of the conventional banks,” she said during an online discussion on Tuesday.
“Islamic banks need to offer more relevant products with better rates and packages by understanding their consumers’ needs,” she added.
The move was essential as the government, along with sharia banks, needed to crack the industry’s 5 percent trap, referring to sharia banks’ market share that has remained around 5 to 6 percent for at least five years, she went on to say.
Despite Indonesia being the largest Muslim-majority country, consumers’ awareness of Islamic banking and finance has been lacking. According to the Financial Services Authority (OJK), Indonesia’s sharia financial literacy rate was a mere 8.93 percent in 2019, far below the general financial literacy rate of 37.72 percent.
Read also: Explainer: What’s sharia banking and where’s Indonesia taking it?
