In Indonesian Banking, Rise in Religious Conservatism Ripples Across Sector

Its chairman, El Chandra, said in an email the community was founded in 2017 to support those facing challenges quitting a financially supportive, but un-Islamic job.

“To decide to quit a riba-ridden job is not easy, many things must be taken into consideration,” said Chandra, who said some branded those who quit as stupid or radical.

XBank Indonesia advises people against taking out mortgages and other loans. But it is hard to measure the impact on demand for banking products among the so-called “hijrah” movement of more conservative young, middle-class Indonesians now embracing Islam many already did not use banks to the extent Western peers might.

Business opportunities

Sunarso, president director of Indonesia’s biggest lender by assets, Bank Rakyat Indonesia (BRI), acknowledges people had left jobs at financial institutions he has worked at for religious reasons.

However, he views the hijrah trend as an opportunity for sharia finance, explaining how it determined a decision to merge the Islamic banking units of BRI and two other state-controlled lenders in February to form the country’s biggest Islamic lender, Bank Syariah Indonesia (BSI).

BSI’s chief executive Hery Gunardi told Reuters it planned to cater to the growing community of more religious millennials in a bid to double its assets.

Also read: Indonesia Embraces Full-Fledged Sharia Financial Ecosystem, Says VP

In fintech, some startups have also been trying to align with Islam, to tap a bigger slice of Indonesia’s multi-billion-dollar internet economy.

Dima Djani, founder of Islamic lending startup ALAMI, expects Islamic financial products to really take off in two to three years as the hijrah movement matures, impacting people’s “lifestyle, their looks, their food and their travel” as they learn more about their religion.

“But in the end, as they continue to learn and shift their behavior ... they will shift their finances,” added Dima, who previously worked at foreign banks. He said due to high demand, he planned to expand ALAMI into an Islamic digital bank later this year.