The Giant Awakens

HERY GUNARDI LEADS BANK SYARIAH INDONESIA TO TAKE ON THE GLOBAL ISLAMIC BANKING INDUSTRY.

- Elisa Valenta

THE MERGER RESULTED IN A POSITIVE RESPONSE FROM THE MARKET

Despite being home to the world’s largest Muslim population, Indonesia still lags behind other countries in the penetration of sharia banking to the overall finance market. According to the Financial Services Authority (OJK), Indonesia’s sharia finance sector makes up just 9.03% of the country’s finance industry, a surprisingly low share considering its majority Muslim population and the strength of the Islamic economy in other countries. In comparison, the share of Islamic financing in Malaysia’s banking system reached 37% last year, contributing nearly all of its banking sector’s growth in 2020.

Indonesia’s Islamic banking sector has been weaker than its conventional peers, with higher funding costs, less efficient operations and poorer underwriting standards, coupled with a lower investment in marketing and education to prospective customers of the products and services available, seen to be acting as an anchor against strong growth. Nonetheless, the establishment of PT Bank Syariah Indonesia (BSI) in February this year is believed to be the catalyst needed to boost the sharia banking sector.

BSI was established through the merger of three major state-owned shariah banks: PT Bank BRI Syariah, PT Bank BNI Syariah, and PT Bank Syariah Mandiri. The surviving entity of the union was publicly listed as Bank BRI Syariah (BRIS), with Bank Mandiri as the largest shareholder in the new bank, holding around 51% of shares. Here Gunardi, former Bank Mandiri vice president, was appointed to lead BSI’s transformation.