Islamic Banking Penetration Reaches 22 Per Cent, Indonesian Sharia Banking Still Has Room to Grow
Jakarta — Islamic banking’s market share in Indonesia is considered to still have substantial room for growth, despite the industry showing expansion trends in recent years.
The latest report from market research firm Ravenry, titled “Sharia Banking in Indonesia 2025,” notes that as of the end of 2025, Islamic banking’s market share stands at only 7 to 8 per cent of total national banking assets.
This finding emerges amid Indonesia’s Muslim population exceeding 240 million people.
The report states that total Islamic banking assets increased from approximately $40.7 billion in 2020 to around $64.9 billion in 2025. This growth is equivalent to an average annual increase of approximately 11.8 per cent over the past five years.
One important structural change that occurred during this period was the establishment of Bank Syariah Indonesia (BSI) in 2021.
Beyond asset growth, Ravenry also highlighted developments in customer numbers. The report notes that approximately 54 million people, or roughly 22 per cent of Indonesia’s Muslim population, have become Islamic bank customers.
Nevertheless, customer distribution remains concentrated in certain regions. Approximately 77 per cent of Islamic bank customers are located on Java Island.
This condition indicates that industry growth is still concentrated in main economic zones, whilst expansion potential outside Java remains wide open.
More even service penetration is considered to influence Islamic banks’ ability to reach segments of society yet untouched by formal sharia-based financial services.
The report also assessed that industry development approaches can no longer rely solely on religious identity or preference.
The market is said to be shifting towards more concrete needs, including financing for micro, small, and medium enterprises (MSMEs), financial services for business operators, integration with the halal ecosystem, and provision of products relevant to daily transaction needs.