It has been about four years since Bank Syariah Indonesia (BSI) rose to the top of the domestic Islamic banking industry. The bank, the result of the merger of three Islamic banks - Bank Syariah Mandiri, BNI Syariah, BRI Syariah - was able to attract a large customer base.
Now, BSI has a sparring partner that enlivens the country's Islamic banking industry: Bank Syariah Nasional (BSN). Not only does it present healthy competition with BSI, the presence of the bank resulting from the "merger" between BTN Syariah and Bank Victoria Syariah can push the pace of this industry faster.
Bank Victoria Syariah (BVIS) shareholders officially approved the change in the company's name to Bank Syariah Nasional (BSN) at an extraordinary general meeting of shareholders (EGMS) held at Menara BTN, Jakarta, Wednesday (20/8/2025).
This decision is also related to the spin off process of BTN Syariah, which was previously a sharia business unit (UUS) into a sharia commercial bank (BUS). BVIS will act as a shell company in the establishment of BSN. The strategy is clearly to separate BTN's sharia entity so that it can grow more independently, with a new, stronger identity.
"Going forward, the BSN name will be used by BTN Syariah as the company's branding and service products, of course after going through the entire licensing process from the regulator," said Ramon Armando, Corporate Secretary of BTN.
For BTN, this spin off is part of their larger roadmap. Over the years, BTN Syariah has been known to focus on property financing, particularly subsidized housing for the lower middle class.
This segment is certainly its hallmark as well as its competitive advantage. But now, with the birth of BSN, BTN wants to go further not only in housing, but also in other strategic sectors.
Now, with the birth of BSN, BTN wants to go further not only in housing, but also in other strategic sectors.
This step was welcomed by many parties, including academics. Sharia Economics Observer from IPB University Irfan Syauqi Beik sees the birth of BSN as an important momentum that can strengthen competition in the Islamic banking industry.
"I really welcome the birth of BSN. Hopefully this can further increase the level of competition in Islamic banking," Irfan told SUAR, Sunday (24/8/2025).
However, he emphasized that there are several important notes. First, the BTN Syariah spin off and the acquisition of BVIS have not automatically increased national Islamic banking assets.
"Therefore, I hope BTN can strengthen the core capital of this National Sharia Bank later," he said.
Second, BSN is expected not to take long to really take part. "As the controlling shareholder, BTN is expected to continue to provide support to strengthen the technology system used by BSN," he suggested.
The third note is more strategic, Irfan encourages BSN not to only focus on the property sector. According to him, the presence of BSN should also be directed to support national programs, ranging from food security, renewable energy, halal industry, to the Hajj ecosystem.
"Including the Hajj village program in Saudi initiated by the President, this can be one of the real roles of BSN in the future," said Irfan.
Growing but still lagging behind
The presence of BSN, whose assets are estimated to be around Rp 100 trillion, is expected to encourage the growth of the Islamic banking industry. So far, the Islamic banking industry has indeed grown but is still lagging behind compared to the overall banking industry.
Citing data from the Financial Services Authority (OJK), until June 2025 the assets of the Islamic banking industry reached Rp 967.33 trillion or 7.41% of the total national banking industry. This figure grew 7.82% compared to the same period last year.
The total third party funds (DPK) of the Islamic banking industry collected in June 2025 reached Rp 738.84 trillion, growing 6.98% compared to the same period last year. Meanwhile, the total financing of the Islamic banking industry in June 2025 reached Rp 666.04 trillion, growing 8.38% on an annual basis.
According to a report by the National Committee for Sharia Economics and Finance (KNEKS), Indonesia's total sharia financial assets in 2024 will reach IDR 9,927 trillion, equivalent to 45% of gross domestic product (GDP). Despite slowing growth from 22% in 2023 to 11.8% in 2024, the sector remains positive and solid.
Entering 2025, the growth trend has strengthened again. As of the first quarter of 2025, the national Islamic finance market share reached 25.1%, with total assets of IDR 9,529.21 trillion. This figure emphasizes the important role of Islamic finance in supporting the stability of the national financial system.
When broken down by sector, the Islamic capital market dominated with a contribution of 86% or IDR 8,176.12 trillion. The growth was 4.7% (YoY), far above the national capital market growth of only 1.4% (YoY). Islamic banking, where BSN will compete, contributed 10% with total assets of IDR 960.82 trillion, growing 7.6% (YoY) and higher than the national banking growth (7%).
Meanwhile, the Islamic non-bank financial industry (IKNB) sector contributed 4% or IDR 392.27 trillion, with growth of 10.9% (YoY). The largest contribution came from the Hajj Fund Management Institution which accounted for 45% of total Islamic IKNB assets.
"The achievement of Indonesia's total Islamic financial assets is a concrete proof of transformation in the Islamic financial landscape in Indonesia. Growth from all sectors not only strengthens the resilience of the national financial system, but is also a strong signal that Islamic finance is ready to become a driving force towards a more inclusive, sustainable and globally competitive Indonesia," KNEKS wrote in its official statement.
Competition map
In the map of the Islamic banking industry, BSN will face giants such as Bank Syariah Indonesia (BSI), which was born from the merger of three state-owned Islamic banks. With a relatively small market share, BSN needs to work on specific niches to avoid becoming an "additional player".
"The property and housing market is a niche for BSN branding. Instead, BSN should be able to expand into the food, energy and Hajj sectors," said Irfan. Thus, BSN is not only known as a property Islamic bank, but also an active player in national strategic programs.
Apart from segment strategy, the challenge of digitalization is equally important. In the era of fintech and mobile banking ecosystems, technology is no longer just a support, but the main foundation. According to Irfan, BTN's support in terms of capital and digital transformation will determine whether BSN is able to compete and grow.
"Digitalization must be good, and do not let the quality of services and technology decline after spin off. This is a challenge for the new bank," he said.
The industry context also shows how big the opportunity is. OJK data shows that Indonesia's sharia banking market share is still around 7%-8% of the total national banking, or 7.44% by 2024. This figure is still far from the huge potential of the Indonesian Muslim market. Therefore, the presence of new players such as BSN is expected to be a growth accelerator.
BTN itself brings experience to the table. While managing its sharia unit, BTN is accustomed to serving the middle class, the backbone of the banking market. With its new status as a sharia commercial bank, BSN has greater flexibility to innovate, expand its network, and respond to the challenges of a changing industry.
Islamic economic center
The presence of BSN can help realize Indonesia's mission to become the center of the world's sharia economy in 2029. Currently, Indonesia already has BSI, which is included in the Top 10 Sharia Global Banks in the market capitalization category.
The government is determined to make Indonesia the center of the world's sharia economy by 2029.
In line with the positive support from the government, BSI Deputy President Director Bob T. Ananta said, as the largest Islamic bank, BSI fully supports the government's hope to make Indonesia the center of the world's Islamic economy.
Bob emphasized that BSI will definitely take part in realizing these expectations. "BSI will focus on three big agendas. Namely, strengthening the halal value chain, developing Islamic finance and literacy, and Islamic financial inclusion," he said.
BSI, said Bob, has a strategic role in this big agenda. The presence of BSI is expected to become a new sharia economic force to encourage a larger Indonesian economy.
"Islamic economy is expected to be a symbol of the nation's economic sovereignty. Through the development of the Halal Ecosystem, BSI supports all segments, both wholesale and UMKM , to jointly improve the halal value chain," said Bob.
In the National Sarasehan of Sharia Economics and Finance, last week, BI Governor Perry Warjiyo presented six national strategic initiatives to support the sharia economy. The first initiative is the Santri Gate (Pesantren Development Movement and Halal Value Chain) to strengthen the economic independence of pesantren so that they can become part of the halal ecosystem chain.
Second, Jawara Ekspor (Sharia Entrepreneurial Network Encouraging Exports), to increase exports of halal products by building an integrated halal export support information system, synergizing strengthening market access, and strengthening international cooperation in the halal product trade sector.
Third, namely Gema Halal (Halal Acceleration Congregational Movement), is carried out to accelerate the halal value chain, through an increase in halal-certified products.
In an effort to encourage the growth of Islamic financing, Bank Indonesia also initiated the fourth and fifth initiatives, namely Sapa Syariah (Synergy of Islamic Trade and Financing) and Kanal Ziswaf (National Collaboration for the Development of Zakat, Infaq, Sadaqah, and Waqf).
The sixth initiative, Lentera Emas (Sharia Economic Literacy and Inclusion towards Golden Indonesia) is focused on various literacy programs to increase public understanding.
Finance Minister Sri Mulyani also emphasized the importance of a strong Islamic financial sector to support Indonesia's commitment to become the center of the world's Islamic economy. The share of Islamic financial assets, which currently stands at 51.42%, needs to continue to be increased, especially in inclusive and sustainable Islamic financial instruments such as Green Sukuk and Cash Waqf-Linked Sukuk (CWLS).
OJK Banking Supervisor Chief Executive Dian Ediana Rae said that the separation or spin off of UUS is an implementation of the fulfillment of the provisions of POJK Number 12 of 2023 concerning Sharia Business Units, for UUS which has assets above Rp 50 trillion and or the total assets of UUS have more than 50% of the total assets of its parent.
In OJK's monitoring, in addition to the BTN Syariah UUS spin off into BSN, there is also a plan to separate the UUS of PT Bank CIMB Niaga Tbk. The spin off process for the two UUSs is currently running in accordance with the stages of the separation plan that has been submitted to the OJK. Furthermore, the separation implementation target continues to pay attention to licensing and fulfillment of applicable requirements.
OJK supports this separation process as part of strengthening the national Islamic banking industry. "OJK hopes that in the future BTN can achieve an economic scale that can compete with the largest Islamic banks in Indonesia," said Dian, Tuesday (25/8/2025).
