The Innovation of Products and Services of Islamic Banks in Indonesia: the Optimal Role of Sharia Supervisory Board in The Industry 5.0 Era

Abstract

The innovation of banking products and services has seen significant growth. However, the pace of innovation in product and service offerings within Islamic banking has been comparatively slower. Make it a challenge for Islamic banking, particularly the Sharia Supervisory Board (SSB), to fulfill a dynamic role. The research aims to enhance the role of the SSB in encouraging innovation in Islamic banks, particularly in the context of the industrial era 5.0. The study employs a qualitative method with ethnographic techniques, including observations and interviews with stakeholders such as the SSB, Islamic bank employees, customers, and academics. The research findings indicate that the performance of Islamic banking has improved, but it needs to be more innovative to compete in the industrial era 5.0. This can be achieved by increasing the development of products and services, such as e-money, that have high bargaining power. The role of the SSB in Islamic banking must be more optimal, involving improving the quality and quantity of human resources, issuing opinions on needed products and services, conducting continuous monitoring, and strengthening detailed supervision. Furthermore, SSB and Islamic banking must synergize with each other in improving products and services to remain competitive in the industrial era 5.0. The study concluded that the optimal role of SSB plays an important role in driving innovation in Islamic banking.