Ramadan Best Time To Pitch Islamic Banking
Bloomberg, JG, AFP
Jakarta. Jakarta-based Bank Syariah Mandiri joined Islamic lenders worldwide to use Ramadan to remind Muslims to obey the teachings of the Prophet Muhammad that ban interest.
Marketing campaigns aimed at 1.6 billion Muslims worldwide have increased this year as the global economy recovers, according to the Pan Arab Research Center in Dubai.
It said spending on advertising by financial services companies in the Arab region was expected to grow by 40 percent this Ramadan compared with last year.
M Shaharyar Umar, an analyst at Pan Arab Research, said that as cautious optimism returned, the banking sector was using the holy month as the perfect platform to promote Islamic banking.
Emirates NBD of Dubai waived payments on personal loans during Ramadan, while Maybank Islamic in Kuala Lumpur started automating charitable donations.
Assets of Islamic financial institutions increased fivefold to $1 trillion between 2003 and last year, but Moody’s Investors Service believes the full potential is at least $5 trillion.
For now, it makes up only about 5 percent of the global financial industry.
In May, speakers at a forum on challenges facing the sector said it had taken 40 years to reach the current level of assets, but now it would take five years to double.
Similarly, Islamic banking has been on the rise in Indonesia, having grown 1,000 percent over the past seven years.
Yet analysts see this phenomenal growth as just the beginning for the sector. Islamic banking in Indonesia is an underperformer in a lucrative market.
According to data from the Economist Intelligence Unit and Boston Consulting Group, Indonesia has 119 million potential customers for Islamic banking products, but has reached only 2.2 percent of them.
Islamic banking assets comprise only 2.81 percent of Indonesia’s Rp 2,678 trillion ($297.26 billion) lending assets, compared to 20 percent in Malaysia.
In 2009, Islamic banking assets totaled $93 billion in Malaysia, where about 60 percent of the 28 million people are Muslims.
Indonesia’s percentage of Shariah assets is far below the 5 percent the central bank set as a target for the industry two years ago.
That underperformance was one reason for the Ramadan advertising push.
Banks in Indonesia, the world’s most populous Muslim nation, offered limited-edition products to generate Ramadan-linked revenue and publicity.
Bank Syariah Mandiri, the Islamic unit of Indonesia’s largest bank by assets, Bank Mandiri, collaborated with a local TV operator on a program aimed at promoting Shariah-compliant banking during the holy month.
“It is an educational program that aimed to promote Shariah banking products such as micro-credit loans,” said Ivan Baruna, the head of the bank’s product division.
He said customers who received funding and successfully expanded their businesses were invited to talk about their experience on the show.
Shariah finance prohibits the charging of interest as well as investments tied to gambling and alcohol. Returns are generated as a share of profits from assets.