Business Process Improvement of Funding : A Proposition to Increase the Performance of Indonesian Islamic Banking

Abstract

The aims of this research paper are to analyze the problems related to some aspects of the Indonesia Islamic Banking such as the implementation of Shari'ah principles and its value chain on the Funding of Islamic Banking, and to formulate an improvement proposal to improve the business process of third party mobilization in order to increase the performance of Islamic Banking in Indonesia. This is a combined qualitative and quantitative research. Value Stream Mapping, Business Process Re-engineering (BPR) and Analytic Network Process were used in a qualitative approach. Likert scale questionnaire was used in a quantitative approach. The results of this research involve a proposition to change the business process of funding, which was actually an outcome of business process reengineering with enablers of information technology development and adjustment of policies related with the enhancement of Islamic principles implementation and business strategy formulation. Design of BPR was able to reduce the waiting time (queue) as a waste or non value added sub process (NVA) and re-layout several necessary but non value-added sub process (NNVA). The business process changes will be effective with the two groups of enabler. The first enabler is information technology development, such as online regristation, and instalation of self service banking machine (SSBM) and/or Cash Deposit Machine (CDM). The second enabler is the policies adjustment that included the recommendations to increase Shari'ah values implementation, as well as the adjustment of strategies combined with a sequential priority of resources empowerment, product development, institutional strengthening, and increase in marketing.

Comparative Analysis of the Determinant Factors of Return on Assets between Islamic Commercial Banks (BUS) and Islamic Business Units (UUS)

“…However, in the research conducted by , the number of Islamic bank outlets has not significantly affected the poverty alleviation due to the Islamic banks' centralized outlet locations in the cities in the provinces and districts. Furthermore, the consideration in the opening of Islamic bank outlets is still increasing the revenue of Islamic banks by opening outlets in strategic locations where potential customers can be acquired (Widigdo et al, 2016). Figure 2 shows the development of the numbers of BUS and UUS outlets from 2015 to 2018.…”