Rising religious conservatism in Indonesia is pulling talent away from what some see as “un-Islamic” banking jobs, industry professionals say, creating hiring problems for conventional banks but a boon for the financial sector Islamic emerging from the country.
This trend comes amid a broader societal shift in the world’s largest Muslim-majority country, driven by millions of “born again” young Muslims adopting stricter interpretations of Islam.
Reuters has spoken to a dozen industry sources about how concerns about Islamic law banning abusive interest payments, known as “riba,” reverberate in Indonesia’s financial world.
Since 2018, hiring for banks and fintech companies in peer-to-peer lending, payments and investing platforms has been more difficult, said Rini Kusumawardhani, financial sector recruiter at Robert Walters Indonesia.
“Basically 15 out of 50 applicants” would turn down jobs in conventional banking and peer-to-peer lending, she told Reuters. “Their reason was pretty clear. They wanted to avoid the riba.
Islamic scholars do not all agree on what constitutes riba. Some say interest on a bank loan is an example, but others say that while such loans should be discouraged, they are not a sin.
“It’s so common that the stigma is that if you borrow it’s the same as riba,” Finance Minister Sri Mulyani Indrawati said during a webinar on Islamic economics earlier this year. “But loans are allowed in the Qur’an as long as they are taken care of and registered correctly.”
Islamic banking accounts for just over 6% of Indonesia’s roughly $ 634 billion in assets in the Indonesian banking sector, but has seen tremendous growth in recent years. Savings in Islamic banks jumped 80% from the end of 2018 to March 2021, surpassing the 18% growth of conventional counterparties, while funding also grew faster than the growth of conventional lending.
Worse than adultery
The exact number of people who left the Indonesian conventional banking sector is not clear. Statistics show a gradual decline in employment, but this may also reflect digitization or layoffs linked to the pandemic.
In February, 1.5 million people were employed in finance and the sector offered the third highest average salary in Indonesia, according to government data. The sector employed 1.7 million in 2018.
For Syahril Luthfi, 36, finding articles online calling riba “dozens of times more guilty than committing adultery with his own mother” was enough to persuade him to quit his conventional banking job and turn to an Islamic lender, he said.
Concerns over the issue have helped create online support groups for former bankers, including XBank Indonesia, which claims nearly 25,000 active members on a messaging platform and has an Instagram account with a half. million subscribers.
Its president, El Chandra, said in an email that the community was founded in 2017 to support those who face challenges leaving financially favorable but non-Islamic employment.
“Deciding to quit a riba job is not easy, a lot has to be taken into consideration,” said Chandra, who said some called those who quit stupid or radical.
XBank Indonesia advises against taking out mortgages and other loans. But it is difficult to measure the impact on demand for banking products within the so-called “hijrah” movement of more conservative middle-class young Indonesians who now embrace Islam – many were already not using banks as much as their own. Western peers could.
Opportunity for Islamic finance
Sunarso, managing chairman of Indonesia’s largest asset lender, Bank Rakyat Indonesia (BRI), acknowledges that people have left their jobs at the financial institutions he worked for for religious reasons.
However, he sees the hijrah trend as an opportunity for Islamic finance, explaining how it determined a decision to merge the Islamic banking units of BIS and two other state-controlled lenders in February to form the country’s largest Islamic lender. , Bank Syariah Indonesia (BSI).
BSI chief executive Hery Gunardi told Reuters he plans to address the growing community of religious millennials in a bid to double his assets.
In fintech, some startups have also tried to align with Islam to tap more of Indonesia’s multibillion-dollar internet economy.
Dima Djani, founder of Islamic lending start-up ALAMI, expects Islamic financial products to really take off within two to three years as the hijrah movement matures, impacting “the way of life, how they look.” , their food and their travels ”as they learn more about their religion. .
“But in the end, as they continue to learn and change their behavior… they will change their finances,” added Dima, who previously worked at foreign banks. He said that due to the high demand, he plans to expand ALAMI into an Islamic digital bank later this year.