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JAKARTA (Reuters) – A surge in religious conservatism in Indonesia is pulling talent away from what some consider un-Islamic banking jobs, industry experts say, creating hiring problems for conventional banks, but a boon for the country’s fledgling Sharia financial sector .
The trend comes amid broader social change in the world’s largest Muslim-majority country, fueled by millions of young, “born again” Muslims adopting stricter interpretations of Islam. [reut.rs/3aMab6D]
Reuters spoke to a dozen industry sources about how concerns about Islamic law prohibiting exploitative interest payments known as “riba” are echoing in the Indonesian financial community.
As of 2018, hiring banks and fintech firms in peer-to-peer lending, payments and investment platforms has been more difficult, said Rini Kusumawardhani, a financial sector recruiter at Robert Walters Indonesia.
“Roughly speaking, 15 out of 50 candidates” would decline a job in conventional banking and in peer-to-peer lending, she told Reuters. “The reason was pretty clear. They wanted to avoid Riba. “
Islamic scholars do not all agree on what constitutes Riba. Some say that interest on a bank loan is an example, but others say that such loans should be discouraged, but they are not sinful.
“It’s so widespread that when you borrow the stigma it is the same as Riba,” Finance Minister Sri Mulyani Indrawati said in a webinar on the Islamic economy earlier this year. “But credits are allowed in the Koran as long as they are carefully taken out and correctly recorded.”
Islamic banking makes up just over 6% of the roughly $ 634 billion in assets in the Indonesian banking sector – but has seen tremendous growth in recent years. Islamic bank savings rose 80% from late 2018 to March 2021, outperforming conventional banks’ 18% growth, while funding also grew faster than conventional loan growth.
Worse than adultery
How many people have left Indonesia’s conventional banking sector is unclear. Statistics show gradual job cuts, but this may also be due to digitization or layoffs related to the coronavirus pandemic.
A total of 1.5 million people were employed in the financial sector in February, and the sector offered Indonesia’s third highest median salary, government data showed. The sector employed 1.7 million people in 2018.
For 36-year-old Syahril Luthfi, it was enough to find online articles describing Riba as “ten times more sinful than adultery with one’s own mother” to convince him to quit his traditional banking job and join an Islamic lender switch, he said.
Concerns about the issue have helped create online support groups for ex-bankers, including XBank Indonesia, which has nearly 25,000 active members on a messaging platform and an Instagram account with half a million followers.
The chairman, El Chandra, said in an email that the community was formed in 2017 to help those facing challenges to quit a funded but un-Islamic job.
“The decision to quit a Riba-dominated job is not an easy one, there are many things to consider,” said Chandra, who said some branded those who quit as stupid or radical.
XBank Indonesia does not recommend taking out mortgages and other loans. But it is difficult to measure the impact on demand for banking products under the so-called “Hijrah” movement of the more conservative young middle-class Indonesians who are now embracing Islam – many already not using banks to the extent that their Western counterparts could .
OPPORTUNITIES FOR BUSINESS
Sunarso, president director of Indonesia’s largest lender by wealth, Bank Rakyat Indonesia (BRI), admits that religious reasons gave people up from the financial institutions he worked for.
However, he sees the hijrah trend as an opportunity for Shariah funding and explains how it was decided in February to merge the Islamic banking entities of BRI and two other state-controlled lenders to create the country’s largest Islamic lender, Bank Syariah Indonesia ( BSI).
BSI chief executive Hery Gunardi told Reuters he plans to reach out to the growing religious millennial community to double his net worth.
In the fintech space, some startups have also tried to join Islam in order to open up a larger portion of Indonesia’s multi-billion dollar internet economy.
Dima Djani, founder of the Islamic loan startup ALAMI, expects that in two to three years, when the Hijrah movement matures, Islamic financial products will really take off and have an impact on “lifestyle, their looks, their food and their travel”, when they learn more about their religion.
“But in the end, if you keep studying and changing your behavior … you will change your finances,” added Dima, who previously worked for foreign banks. Due to the high demand, he planned to expand ALAMI into an Islamic digital bank this year.
($ 1 = 14.250.0000 rupiah)
Reporting by Gayatri Suroyo and Tabita Diela; Edited by Ed Davies and Kenneth Maxwell
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