Tech-based Lenders Bet on Syariah Banking in Indonesia
(15 March 2022 – Indonesia) Tech-based lenders are enthusiastically tapping into syariah banking in Indonesia, betting on an underpenetrated market with a potential customer base of 45 million.
The rate for such banking in Indonesia is just 7 percent, dwarfed by Malaysia's 29 percent and Saudi Arabia's 65 percent.
“This is an area where there is an unsatisfied niche,” said Indonesia's tech-based Bank Jago deputy chief executive Arief Harris Tandjung. Arief added that there was strong demand but convenience and syariah product features had been below expectations.
Bank Jago, which launched a syariah app three weeks ago, saw syariah financing account for two-fifths of its 5.3 trillion rupiah (S$503 million) in lending at the end of 2021. It provided zero syariah financing in the previous year.
The head of Bank Aladin, Dyota Mahottama Marsudi, agrees that demand for syariah banking is large in Indonesia, noting that products needed to match customers' needs.
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