Strategy in Overcoming Market Saturation of Islamic Banking in Indonesia

Meri Indri Hapsari, Noven Suprayogi, Salahuddin Rizal

Abstract


Rapid development of banking industry in Indonesia is not offset by the spread of Islamic banking services and access. It can be seen from the level of density of overall bank from spatial side, the number of banks per square kilometre and the size of the market, i.e. the number of banks per thousand of inhabitants. Processed Statistical of Bank Indonesia Data and Indonesia Statistical Bureau in 2011 showed that Java is an island with the highest number of the bank offices per square kilometre, while Papua has the smallest office per square kilometre. From The size of the market, Sumatra is an island with the highest number of bank offices per thousand inhabitants. Every one thousand inhabitants were able to be served by one bank office. Meanwhile, in Papua, every 17,000 population was only able to be served by a single bank. This shows that there is a gap in the number of bank offices that suggests some areas, such as Java and Bali, in a number of banks already dense spatially and have smaller potential expansion, or by the other meaning, the banking market in the region is already saturated. Differences in the level of saturation have an impact on Islamic banking services performance which can be measured by profitability, efficiency and stability of the financial system. On the basis of this assessment, the Islamic bank saturation level in province level in Indonesia becomes important. This is related to the mechanism establishment of incentive and disincentive policies, both in the central as well as regional by the Central Bank as regulator and supervisor of the banking system. This study use descriptive quantitative approach. The Data used are secondary data from the various sources. Data are collected on an annual basis using two analysis techniques, Matrix of Boston Consulting Group (BCG) and Euclidean Distance. As for the analysis tool in strategies formulating to overcome market saturation is used Ansoff Matrix.

Aus. J. Isla. Finan. & Busi. Vol 2(1), April 2016, P 1-16


Keywords


Market Saturation; Islamic Bank; and Strategy

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