Indonesia's Islamic Banking Sector Faces Market Share Challenges

Current Market Position

Indonesia's Islamic banking industry continues to struggle with expanding its market share despite three decades of presence in the financial sector. As of October 2025, the total assets of Islamic commercial banks (BUS) and Islamic business units (UUS) reached Rp 1,397 trillion. In comparison, the total assets of conventional banks during the same period amounted to Rp 13,219 trillion, making Islamic banking assets only about 10% of the national banking assets.

Industry Insights and Challenges

Anggoro Eko Cahyo, CEO of Bank Syariah Indonesia (BSI) and Chairman of Asosiasi Bank Syariah Indonesia (Asbisindo), highlighted that while Islamic banks have made progress, they still lag behind conventional banks in terms of network coverage. The OJK's 2025 survey on financial literacy and inclusion revealed that the Islamic financial literacy rate stands at 43.42%, indicating a relatively good understanding of Islamic banking among the population. However, the inclusion rate remains low at 13.41%, suggesting that accessibility continues to be a significant barrier to the growth of Islamic banking.

Future Strategies

Industry leaders are now focusing on improving accessibility to drive the growth of Islamic banking. Anggoro emphasized that while the understanding of Islamic banking is relatively good, the limited access to Islamic banking services hinders its expansion. The industry is expected to implement strategies that enhance accessibility, potentially through digital banking solutions and expanded branch networks.