Indonesia’s Islamic finance assets reach 3,231 trillion rupiah

Indonesia’s Islamic finance expansion gives providers more financial weight, but its capital-market-heavy asset base makes customer acquisition a separate commercial task.

The Indonesian Financial Services Authority (OJK) put Islamic financial assets at 3,231 trillion Indonesian rupiah as of August, with a market share of 11.16 per cent. Its chair discussed the industry’s development following a meeting with the National Sharia Council-Indonesian Ulema Council in Jakarta on 20 October.

For institutions planning investment, the strongest argument is for selective expansion tied to customer use. Larger assets create room to develop products and finance activity. Returns on distribution spending depend on attracting customers who transact, save and borrow regularly, with acquisition costs that those relationships can repay.

Capital markets carry the largest asset pool

Islamic capital-market assets stood at 1,942 trillion rupiah, followed by banking assets of 1,089 trillion rupiah and non-bank financial industry assets of 199.7 trillion rupiah. That composition puts securities and investment products at the centre of the sector’s financial scale.

For banks, the business case therefore needs its own measures. Financing outstanding indicates the size of a portfolio; new disbursements indicate fresh activity. Borrower numbers and average exposures reveal how that activity spreads across customers. Each answers a different question about the revenue available to support expansion.

The same logic applies to investment products. New issuance can create origination and distribution income, while rising security values increase assets without requiring additional buyers. A strategy built around issuance needs a pipeline of issuers and purchasers; a strategy built around retail distribution needs recurring subscriptions and customer retention.

Concentration also changes the competitive opportunity. Growth spread across institutions would favour a broad supplier and distribution market. Growth concentrated in a few large relationships would reward access to those institutions. For a prospective entrant, these scenarios imply different partnership choices and very different spending commitments.

Digital customer gains give banks a narrower benchmark

There is a concrete example of customer expansion at Jago Syariah, Bank Jago’s Islamic business unit. According to Kontan, its users reached almost 2.4 million by December 2025, up 16.5 per cent year on year. This gives digital distribution a customer-growth benchmark alongside the national asset figures.

Product design offers another commercial clue. More than 40,000 customers had started planning pilgrimage spending through Jago Syariah’s features. Purpose-based saving gives a provider a specific customer need around which to build a relationship, with a clearer proposition than a general appeal to Islamic finance.

For product teams, the attraction is the link between a recognisable goal and repeated use. A savings feature can give customers a reason to return and allocate money. Its commercial value depends on balances retained and subsequent activity, alongside the cost of acquiring and servicing each account.

The national opportunity is wider than that institution’s experience. This year’s National Survey on Financial Literacy and Inclusion recorded Islamic financial literacy of 43.07 per cent and Islamic financial inclusion of 13.24 per cent. These are survey measures of literacy and inclusion, separate from the sector’s 11.16 per cent asset market share.

Across financial services overall, the same survey recorded literacy of 69.57 per cent and inclusion of 93.61 per cent. Both measures were higher than their Islamic finance equivalents. That makes the commercial task more specific than promoting financial services generally: Islamic providers need a proposition that earns a place in customers’ financial routines and supports the cost of maintaining those relationships.

The gap makes conversion a stronger commercial priority than awareness alone. Education spending needs a route into a usable product and a lasting relationship. If familiarity rises while regular use stays weak, the provider carries the cost of promotion without the customer income needed to sustain wider distribution.

Product reform needs a route into regular use

OJK’s policy directions cover stronger industry structures, product innovation, wider inclusion and partnerships. Its product agenda includes Islamic banking investment products and exchange-traded funds, including Sharia-compliant gold funds, alongside electronic issuance of debt securities and sukuk, or Islamic securities.

The regulatory programme also reaches beyond banks and securities products. OJK is strengthening rules governing guarantee services, financing companies, venture capital firms and other financial service institutions. For businesses choosing financial partners, this gives the policy agenda a wider scope: investment in distribution must fit the institution and service being offered.

Digital assets form another part of the agenda. OJK is reviewing Sharia principles for digital financial assets and developing a Sharia taxonomy for the Digital Financial Assets Industry. It is also working with the Ministry of Finance on sukuk tokenisation initiatives. For product developers, the commercial challenge is to turn technical design into a service customers understand and have a reason to use repeatedly.

Consumer protection accompanies that product work. OJK is strengthening regulations governing the conduct of data collectors in financial services. For providers investing in customer acquisition, the handling of customer information belongs within the commercial proposition: a lasting relationship requires customers to trust the service as well as understand its financial purpose.

That agenda addresses the range of products institutions can sell. Successful distribution also requires a proposition customers understand and can use at an acceptable cost. More investment choice can deepen existing relationships; widening access requires products and channels that draw additional customers into sustained activity. The largest execution risk is spending on launches whose subsequent use generates too little income.

OJK remains committed to strengthening the role of the Sharia Supervisory Board in maintaining Sharia integrity and public trust.