Bank Syariah Indonesia
Bank Syariah Indonesia, formed last year by the merger of three state-owned Islamic banks, has rapidly proved its worth in the market.
It certainly helps that BSI, led by chief executive Hery Gunardi, has no direct competitors. Rather, it competes with the top four commercial lenders in Indonesia. But despite its near stranglehold on Islamic banking services in the country, BSI has focused on growing further while keeping costs low.
In March, BSI’s cost of funds was 1.62%, versus 2.19% a year ago. In May this year, it dropped further to about 1.5%: the improvement is impressive considering the cost of funds was 3.4% before the bank’s merger and official creation. BSI was able to achieve this through smart solutions: it tapped into the core Islamic banking principle where paying interest is forbidden.
Indonesia has the world’s largest Muslim population; 87% of the 280 million people identify as Muslims. To cater to them, BSI offered customers a new one-year savings account which does not pay interest and, in return, it does not charge any administrative fees.