Danamon strengthens Sharia banking with digital push and community outreach
As Islamic finance expands in Indonesia, Danamon taps into digital tools and targeted services to drive inclusive growth.
As Indonesia’s Sharia banking sector continues to gain momentum, Bank Danamon is quietly carving out a larger role through a strategy rooted in digital innovation, customer-focused products, and strategic partnerships. The bank’s Sharia Business Unit posted 14% growth in assets last year, reaching Rp14.2 trillion (US$870 million) by December 2024—outpacing the broader banking market and signaling strong demand for Islamic finance.
Digital platforms driving access and inclusion
At the heart of Danamon’s approach is a shift toward digital platforms that make Sharia-compliant financial services more accessible to individuals and communities across the country. From everyday savings accounts to long-term planning for Hajj pilgrimage, Qurban (religious sacrifice) or education, Danamon has developed a suite of services that customers can access without ever stepping into a branch.
The bank’s digital Sharia offerings, such as Danamon Save iB and Tabungan Perencanaan Syariah iB, are designed with flexibility in mind. Its multicurrency account, DL Pro iB, supports transactions in nine currencies, while the Hajj savings account is linked directly to the government’s official pilgrimage management system (SISKOHAT). These tools are helping customers align financial planning with personal and religious goals—on their own terms and timelines.
Outpacing the market in growth and profit
Danamon’s results in 2024 reflect more than just steady progress. Sharia financing climbed to Rp11.7 trillion (US$717 million) by the end of the year, while Sharia funding reached Rp9 trillion (US$552 million)—driven in part by a nationwide push through its “Sharia First” program. Profitability kept pace, with the unit posting Rp136 billion (US$8.3 million) in profit, indicating healthy margins as the portfolio scales.
The financing side includes a wide mix: from mortgage and leasing products to Hajj and Umrah travel financing, working capital support, and green and sustainable lending. On the funding side, Danamon is leveraging its digital infrastructure and broadening access through community-based outreach, with a focus on Islamic institutions, education, and the growing Muslim middle class.
Tapping into a rising Sharia economy
Indonesia’s Sharia banking industry remains on an upward path. As of September 2024, sector-wide assets stood at Rp895.9 trillion (US$55 billion), according to OJK, the country’s financial regulator. Third-party funds grew 12% year-on-year, underscoring increasing public confidence in Islamic finance.
Danamon sees potential not just in the numbers, but in the shifting behavior of consumers who are looking for values-based financial solutions. With Indonesia home to the world’s largest Muslim population, the bank believes there is room to expand not just financial products, but an entire halal financial ecosystem—one that touches education, travel, investment, and philanthropy.
Steps in this direction include Danamon’s Sharia-compliant investment and bancassurance products, offered in partnership with top Indonesian financial institutions, and its digital ZISWAF service which helps customers to manage charitable donations in accordance with Islamic custom.
Strategic priorities for 2025 and beyond
Looking ahead, Danamon’s Sharia unit is planning deeper integration with its parent company MUFG Group and affiliates like ADMF, with a focus on expanding services for specific communities. That includes targeted offerings for schools, Islamic institutions, Hajj and Umrah pilgrimage groups, and employee cooperatives.
Product innovation remains front and center. The bank is developing more personalized and flexible financing tools—like Danamon BISA Haji and employee-focused lending products—while improving digital access and user experience. Governance and risk management are also being enhanced, supported by upgraded infrastructure and more streamlined internal systems.
There’s also an emphasis on human capital. Danamon is investing in training its Sharia banking teams to strengthen expertise, customer engagement, and compliance with Islamic principles.
A steady push toward a larger role
With global economic conditions shifting and digital expectations rising, Danamon’s blend of caution and innovation could offer an edge. By focusing on both technology and community needs, the bank is well positioned to help shape Indonesia’s Sharia banking future—not just by growing its market share, but by reinforcing a more inclusive, values-driven model of finance.
Islamic Finance community
With Qorus memberships, you gain access to exclusive innovation best practices and tailored matchmaking opportunities with executives who share your challenges.