Islamic Banking Innovation: Addressing Fintech Challenges Through Blue Ocean Strategy (Journal of Business Management and Islamic Banking)

Summary

• Fintech investment in the Asia-Pacific region grew to almost US$3.5 billion in 2015, highlighting rapid digital transformation.p.2
• Fintech lending in Indonesia reached IDR 4.47 trillion as of March 2018, registering an annual growth rate of 74.6%.p.2
• The research evaluated digital transformation strategies across a sample of 5 Islamic commercial banks selected from 14 Sharia Commercial Banks in Indonesia.p.5
• Indonesia's GDP growth remained resilient at 5.03% entering 2024, with projections between 4.87% and 5.12% for the first two quarters of 2025.p.5
• The market share of Islamic banking relative to conventional banking in Indonesia remains relatively low at around 7% to 8%.p.6
• The Sharia financial literacy index in Indonesia expanded significantly from 8.93% in 2019 to 43.42% by 2025.p.6
• The Sharia financial inclusion index in Indonesia rose from 9.10% in 2019 to 13.41% by 2025.p.6

Key insights

1. Over 76% of internet users aged 16-64 years used smartphones during the pandemic, accelerating demand for digital banking services.p.2
2. In 2018, Asia led global fintech funding with $22.65 billion across 563 transactions, followed by the United States with $11.89 billion across 659 transactions.p.2
3. Indonesia's Muslim population comprises 85% of its 250 million total population, representing a substantial untapped customer base for Sharia digital financial products.p.2
4. Primary data for this qualitative research was gathered from interviews with 6 informants across banking management, digital officers, and academics.p.5
5. Despite sector growth, Islamic banking market share remains muted at around 7% to 8% of the overall national banking industry.p.6
6. Sharia financial literacy saw a notable increase from 8.93% in 2019 to 43.42% in 2025, driven largely by digital transaction platforms.p.6
7. Sharia financial inclusion progressed moderately from 9.10% in 2019 to 13.41% in 2025.p.6
8. Applying Blue Ocean Strategy allows Islamic banks to eliminate operational inefficiencies and create integrated digital ecosystems combining ZISWAF, cardless withdrawals, and Sharia fintech solutions.p.11