Digitalisation and Sustainable Finance in Indonesian Islamic Banks

Previous studies asserted that the institution requires innovation and embraces digital transformation to promote sustainability. Since sustainable and Islamic finance is complementary, Islamic banks should be the first to implement digitalisation and sustainable finance. This study aims to provide an analysis of Islamic banking’s stance towards digitalisation and sustainability. To this end, a content analysis of the 2019-2021 available annual and sustainability reports from full-fledged Indonesian Islamic banks has been conducted. This study finds that most Islamic banks in Indonesia have implemented and provided basic digital features for their customers, including debit cards, automated teller machines (ATM) and Cash Recycle Machine (CRM), internet channels and mobile banking applications. Other services are also provided, including zakat and waqf payments, Islamic services and Quick Response Code Indonesian Standard (QRIS). Generally, they have met the minimum requirement to provide sustainability reports as mandated by Regulation 51/POJK.03/2017. However, the quality of relevant activities expected to promote sustainable finance must be improved to contribute substantially to society. This research suggests harmonisation between digital transformation and sustainable finance agenda and includes a practical proposal.