ABSTRACT
The number of Islamic banks in Indonesia is growing. However, the industry has experienced a decrease in performance compared to conventional banking. This research aimed to address the problems faced by Islamic banking institutions in Indonesia, using an Analytical Network Process (ANP) framework. The results show that the problems that arise in the development of Islamic banks in Indonesia consist of four important aspects, namely: human, technical, legal/structural and market/communal. Decomposition of the problem highlighted the following: 1) there is not yet enough Islamic bank capital; 2) there is a lack of understanding of Islamic bank practitioners; 3) there is a lack of government support; 4) trust and public interest in Islamic banks tend to be low. Meanwhile, the priorities of strategic policies, which are considered qualified to solve the problems of the sharia banking industry in Indonesia, are as follows: 1) to strengthen funding and business scale and increase efficiency; 2) to improve the quantity and quality of sharia banks’ human resources, as well as their information systems and technology; 3) to improve sharia banks’ funding structure and to align ruling and supervision.
