CHAPTER I
INTRODUCTION
1.1. Background
As we all know banks particularly in Indonesia have now operated based on dual
banking system which is Conventional Bank and Sharia Bank. This country which has been
known as the biggest moslem population in the world has the potential to grow more
Consumer Sharia Banking products as a mean to answer the needs of majority of moslem
community in Indonesia.
After the monetary crisis back in 1998, the banking industries in Indonesia have shown
some improvements in terms of banking performance and their size of differentiation. For
Conventional Banks, the consumer always try to look for the best products offered through
massive and intensive marketing campaign and advertisement. With a good communication in
mass media, consumer will be easily attracted by the Bank’s product differentiations. The
louder and bigger the campaigns are the more Banks can drive consumer perceptions into
accepting their product. While for the Sharia Bank, these approaches sometime are not really
effective, and the consumer perception and expectation seems to be mixed between whether or
not they can accept the differences and exclusivity that can only be found in Sharia Banks
rather in Conventional Banks.
Currently the development of Sharia Banking system in Indonesia is implemented in
the framework of the Indonesian Banking Architecture (Arsitektur Perbankan Indonesia),
1 2 which provides an alternative in banking services beside the traditional conventional banking
service that has been in existed in the country since hundreds years ago. Sharia Banking and
Conventional Banking systems will need to be further developed and synergized in order to
mobilize public funds more intensive and effective, to support the country future economic
development.
As the world's most populous Moslem country, as of September 2008, central bank
data showed us that Indonesia had 3 Full-fledged Sharia Commercial Banks (Bank Umum
Syariah/BUS) and 28 Sharia Banking Units (Unit Usaha Syariah / UUS) and 128 Sharia
Creditor Bank (Bank Perkreditan Rakyat Syariah). Currently, the total number of the office
networks that was able to access sharia monetary activity was 761 outlets and 1300 Sharia
Service Counters from the establishment of “Office Channeling” program for Conventional
Banks. (Direktorat Perbankan Syariah, Statistik Perbankan Syariah, (Islamic Banking
Statistics) Edition: July 2008, quoted from http://www.bi.go.id)
Sharia Banking Units are basically a special division which is developed to run the
Sharia Banking business within the Conventional Bank. One of Commercial Bank which
opens Sharia Banking Units is Bank DKI, the regional government bank of DKI Jakarta. The
Sharia Banking Units of Bank DKI is known as Bank DKI Syariah, which will become the
research subject of this thesis project.
In its role as the central bank, one of Bank Indonesia’s goals in promoting Sharia
Banking is to enable the industry to increase their assets as much as possible, in the relatively
short timing. Bank of Indonesia estimated that Sharia banking industry will be able to enjoy
high growth compared to conventional banking in general. This prediction was made based on
the fact that we have completed the Law of Islamic Securities (Surat Berharga Syariah
3 Negara) and Law of Islamic Bank (Undang Undang Perbankan Syariah) as well as the new
Tax Law. (Zubair, Muhammad Kamal, Acceleration of The Growth of Islamic Banking in
Indonesia, lecturer in Sharia Program at STAIN Parepare and Post Graduate Program of UIN,
Yogyakarta. journal.uii.ac.id/ index.php/ Millah/article/view/427/34).
For the above reason, in early 2007, Bank Indonesia has initiated a nation-wide policy
called The Growth Acceleration Programme of Islamic Banking (Program Akselerasi
Perkembangan Perbankan Syari’ah) during year 2007-2008’. This program must be followed
by the whole Sharia Banking industry players in this country. The target is that in 2008, the
market share of Islamic banking increased to 5.18% of national banking customers which is
equivalent to Rp. 91.57 quintillion in the end of 2008.
1.2. Problem Identification
The Sharia finance system was first introduced in the country since more than 20 years
ago. It has grown tremendously during the relatively short period not only in banking sector
but also in insurance and mutual fund sectors. The first Sharia finance institution in banking
sector was pioneered by Bank Muamalat Indonesia back in 1991. However, after the
development stage of more than 18 years in Indonesia, despite the leapfrogging growth of
35.6% annually with overall assets valued at Rp 49.5 trillion in assets, The progress of
achieving the acceleration program to reach targeted percentage from the total Banking market
share nation-wide by the end of 2008, has not been successful.
4 As at December 2008 Sharia Banking market share growth remains small, and only
reaching 2,14 % of the overall banking assets. (Bank Indonesia, Laporan Perkembangan
Perbankan Syariah, 2008, quoted from http://www.bi.go.id).
Figure 1.1.: Share Growth Acceleration of Sharia Bank’s Third Party Fund Market
(Source: KARIM Business Consulting – Market Analysis 2010)
This condition is presumed as the actual examples of Sharia Bank’s player lack of
knowledge and prediction to understand what exactly are the consumer’s priorities in terms
the kind of benefits they really want from the Sharia Bank industry. Islamic banking is
required to increase more effort in socialization, making instrumental innovation of banking
product. This relates to facts that in Indonesia Sharia banking functions has not been only a
financial and commercial institution but also a social-finance institution because its
5 involvement in social activity leads to a emotional attachment of majority Indonesian people
in every aspect.
Despite the fact that this program has not achieved the main objective, there were
several new impacts of this acceleration program, which has been seen as the ‘side – effect’
problem which rose into current condition from the originally positive national driven goal, as
follows:
(1) The increment of NPF which has been reaching to 6,2% on September 2007 (which is
higher than NPL percentage in the Convensional banks).
(2) There weren’t enough genuine effort taken to develop new Sharia Banking products.
(3) The second problem was just an impact of the sense lacking of how to identify the true
unique core competencies of Sharia Banks which will raised the values of Islam in
Indonesia (locally as well as internationally).
(4) It is more the need in emphasizing on program quality rather than focusing on the
acceleration program that represents quantity of Sharia Banking transactions. (Aji Dedi
Mulawarman, Seminar Interaktif ”Shari’ah Weekend”, diadakan LEM FE-UII dan
KOPMA FE UII, Jogjakarta, 13 Desember 2007).
As of today, in order to eliminate those problems and in line with the previous growth
acceleration program for developing Sharia banking in Indonesia, Bank Indonesia has created
concrete efforts formulated as ‘Grand Strategy of Islamic Banking Market Development’. This
is basically a comprehensive strategy of market development covering strategic aspects, by
determining the vision of 2010 as to make Indonesia as the leader in Islamic Banking industry
in ASEAN, by way of:
6 •
Creating the new image of inclusive and universal Islamic banking,
•
Mapping a more accurate market segment,
•
Developing more various products,
•
Improving services
•
Adopting new communication strategy of Islamic banking by positioning it as a
beyond banking position. (“Islamic Banking is more than just a bank”).
(Directorate of Islamic Banking, Bank Indonesia, Grand Strategy of Islamic Banking Market
Development, Juli 2008, quoted from http://www.bi.go.id)
Hence, as the implementation stage of the Grand Strategy of Islamic Banking Market
Development, two most important initiatives from Bank Indonesia’s concrete programs that
will need to be performed are including but not limited to:
1. Assigning a new vision of Islamic banking development on phase I in 2008 to build
understanding in Islamic banking as Beyond Banking by reaching an asset target of Rp
50 trillion and industrial growth of 40%, phase II in 2009 with the objective of
positioning Indonesian Islamic banking as the most attractive one in ASEAN. Phase III
in 2010 will have the objective of attaining Indonesian Islamic banking as a leading
Islamic Bank in ASEAN. ( please see Appendix 1 )
2. Creating new image program of Islamic banking that includes positioning,
differentiation and branding aspects. The new positioning of Islamic bank as banking
that provides mutual benefits to both parties, differentiation aspect with competitive
advantages with various products and schemes, transparency, competent and ethical
finance, updated and user friendly information technology as well as qualified
7 investment expert of Islamic finance. Branding aspect will be represented by ‘Islamic
bank, more than just a bank’ that creates image of ‘beyond banking’.
With this two policies is mind, all Banks which have opened a Sharia Banking Units
such as Bank DKI Syariah will need to expand and broaden their product and marketing
strategic plan to be able to cope with the new challenge given by Bank Indonesia. The Bank’s
management must be able to out of the box and taking lot of consideration that the services
they will in the future provide must be able to take the Bank forward by keep searching for the
new image building of ‘beyond banking’.
1.3. Objective of The Project
Since Bank DKI Syariah also need to speed up on growing their consumer banking
product to reach the targeted acceleration by two times in growth, thus our main purpose in
doing this project study is to assist Bank DKI and its Sharia Banking Unit (Bank DKI Syariah)
in getting confirmed understanding on how the consumer as in general, and the individual
customer in particular, perceived on their expectation of what kind of Sharia Banking product
and services that they actually need.
The project will search implications and learn insights on how strategic management of
one organization like Bank DKI Syariah could be driven by outer paradigms that has been
rooted within their customer minds which not necessary found or being explicitly expressed in
the surface during day to day business interactions.
On the Grand Strategy of Islamic Banking Market Development Bank the earlier stage
of Sharia Banking up till 2008 were classified by Bank Indonesia as the ‘innovators’ time.
8 Going forward Bank Indonesia will involve more parties as players in the overall architecture
of Sharia Banking arena. This intention is called as ‘Total Football’ approach, which including
4 elements such as: Activists, Islamic Banks, Bank Indonesia as Central Bank, as well as
Academics.
Figure 1.2.: Grand Strategy of Islamic Banking Market Development
(Source: Directorate of Islamic Banking, Bank Indonesia)
9 As academician who has interest in the development of Sharia economic we then
would like to contribute some value adding proposition. In trying to bring up the
understanding of people perceptions towards Sharia Banking services, our study will challenge
the complexity of Sharia principal which contented in what is called Maqasid al-Sharia or
The Objective of Sharia (see Glossary). Purposely, we are using the basic principal on our
GFP (Group Field Project). During our study in this project a pre-designed value based
assumption using the above principal will be interpreted into a questionnaire-based research
involving Bank DKI Syariah customers.
Since this study is exploratory in nature, we choose to run a small-sized and limited
research as our approach to gather data. The objectives of this study were as followings:
1. To assess the profile and prior knowledge of customers about Bank DKI Sharia’s
product benefits;
2. To know what type of benefits and features in Sharia’s contexts motivates the
consumer to open an account and banking with Sharia Bank;
3. To know the customers’ priority values in the perspective of ‘Maqasid al-Sharia’ and
the ranks of each values;
4. To analyze the crucial concerns that influence the customers decision making process
in regards to their financial dealings with Sharia Bank;
5. To indicate the product dimension gap occurred between Conventional Bank and
Sharia Bank’s product.
10 1.4. Benefit of The Project
Our goal for conducting this project is to provide beneficial information that can be
leveraged to enhance Sharia Banking business in Indonesia, especially for:
1. The Bank: From this study Bank DKI Syariah as the surveyed institution hopefully
will get insight of what kind of product and business model innovations which feasible
to be developed, and also as a reference to develop breakthrough business strategy in
the future.
2. The academic world: As centre of education BINUS Business School with all related
academic stakeholders will gain a better understanding on Sharia Banking business
implementation which has been tested on the field, although in just using a simple
approach such as our project. Hopefully the application of business theories will get its
own value added linkage to the finding of our specific research on Sharia institutions
such as Bank DKI Syariah.
1.5. Scope of Work
To enable us to finalize this project we have defined the scope of project that will be
conducted. We use the scope as framework of our basic steps, as follows:
1. 1st scope: to determine a predefined common understanding on what should be put into
the research made to review Bank DKI Syariah’s consumer perception and expectation
on differential factor between Sharia Bank and Conventional Bank.
11 2. 2nd scope: to define the basic assumption for forming the survey by using concepts on
Islam Law as the ground rule of Sharia and its value that might lived in people’s mind.
Hence, the basic assumption that will be used is the basic Islamic human actualization
values known as: Maqasid al-Sharia.
3. 3rd scope: to determine any original ideas that have been checked with the living
reality, to be followed up with the implementation stages learnt from the relevant
managing innovation concepts.
4. 4th scope: to review the survey result to be confirmed by any meaningful value
proposition concept that we had learnt as a driver to make a breakout strategy for Bank
DKI Syariah, and whether the result could be used in any further action steps.
By following the four framework’s aspect hopefully we can arrived to a beneficial
result. Hence after following through the whole steps we will then be able to wrap-up all facts
and concept into workable and doable conclusion and recommendation.