Islamic banks’ market share persistently low

The market share of Indonesia’s Islamic banks has remained low at less than 5 percent in the past several years despite efforts to promote sharia financial services to the mostly Muslim Indonesian population. Indonesians are still reluctant to open accounts or carry out transactions through sharia-compliant banks as they are mostly still unaware of the advantages of Islamic banking services, Islamic finance expert Irfan Syauqi Beik said. Another factor that has caused the sharia banks’ stagnant low market share is their weak financing capacity, he said. Moreover, most of the existing Islamic banks are undercapitalized so that they are unable to expand their business rapidly.