Indonesia’s Islamic banking retail market holds the most significant untapped potential in the sector encompassing consumers and the rapidly expanding numbers of SMEs and microbusinesses. While shariah compliant retail transactions in Indonesia still remains comparatively low, the striking growth of the sector at an average of 36.3% over the past decade illustrates the scale and scope for growth. As part of its renewed strategy, Bank Muamalat has drawn on its brand strength in addition to its broad knowledge of the Indonesian shariah retail market to formulate locally tailored shariah retail products. This has facilitated deeper market penetration in the retail sector in order to secure a dominating position to take advantage of inevitable future growth.

Central to the bank’s success in increasing market penetration to 23% over 2012 has been the extension of its branch network and streamlined e-banking platform. These enhanced channels are for both internet and mobile banking to provide total accessibility and enable face to face interaction with customers to gain greater insights into their product needs and build long term relationships. This has also yielded more specialised products for the shariah retail market for savings and financing as well as facilitating Bank Muamalat’s entry into niche, high growth sectors such as pension financing, SMEs and micro financing.

The bank’s acutely targeted retail strategy has been implemented carefully but aggressively with a 46.25% increase in dispersed financing for 2012 to 32.7 trillion RP; 65% of which is consumer segment financing. Improved customer relationship management has also significantly reduced non-performing loan financing from 2.06% in 2011 to 1.80% in 2012. The success of its shariah retail operations has also been underpinned by an increase in third party funds in the retail segment to 16.369 trillion RP which equated to 33.9% of the bank’s total deposits at the end of 2012.