Indonesia, Malaysia and the Philippines are proving the case for Sharia-compliant financing with their own numbers.
For Islamic banking executives, growth raises a practical question: can the bank serve more customers while keeping every financing transaction properly structured, documented and controlled?
The answer depends on how well technology supports the underlying contracts. A financing application may look straightforward to the customer, yet require several connected transactions, ownership records and approvals behind the scenes.
The financing process determines the operating model
Islamic financing adds requirements conventional lending does not carry, determined by the underlying contract.
Murabaha
The financier purchases an asset before reselling it to the customer at an agreed markup.
Ijarah
The financier leases an asset, retaining ownership during the lease.
Musharakah
The bank and customer participate in a partnership, requiring arrangements for ownership, profit allocation and losses.
These structures require different workflows and records. A single purchase-and-resale sequence cannot represent every Islamic product, as reflected in World Bank analysis of Islamic finance and financial inclusion and the IMF's explanation of core Islamic finance contract definitions.
For executives, the implication is operational: product differences must remain visible throughout processing. Creditworthiness still matters, while ownership, documentation and transaction sequencing introduce additional considerations.
Local requirements also shape servicing. In Malaysia, Bank Negara Malaysia's Shariah Advisory Council resolutions established that early-settlement rebates must be granted for relevant sale-based financing. They also distinguish compensation that may be recognised as income from penalties directed to charity. Describing all rebates as discretionary, or all late-payment charges as charitable donations, would therefore mislead readers.
Three markets, three commercial arguments, one regional pattern
Indonesia, Malaysia and the Philippines each show a different reason to strengthen Sharia-compliant financing operations. The shared pattern is that growth only creates value when the bank can preserve underwriting discipline, process consistency and governance evidence.
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Indonesia: expand access without losing underwriting discipline
OJK's Sharia Financial Services Sector Update reported Islamic banking assets of IDR1,067.73 trillion in December 2025, representing 7.69% of banking assets. Financing grew 9.58% year on year, with gross non-performing financing at 2.16%.
The discipline argument is not abstract here. Bank Central Asia reported a 23.3% ROE against Bank Mandiri's 20.3% at broadly similar profit scale in FY2025, based on a stronger cost-to-income position. The comparison is also supported by Bank Mandiri investor materials.
Both banks operate in the same expanding market. What separates them is underwriting and cost control, not access to growth. Islamic banking units scaling into that same growth should expect the same test: applications getting easier to complete is only a win if underwriting quality holds as volume rises.
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Malaysia: improve efficiency in a market where Islamic financing already leads
Bank Negara Malaysia's Annual Report 2025 reported that Islamic financing accounted for 48% of total financing in 2025. This is the one market in the region where Islamic financing is named directly as a growth driver, not a side portfolio.
That raises what efficient has to mean here. At this scale, reducing repeated document requests, approval delays and processing effort is not a marginal improvement. It is a direct lever on retention and profitability across roughly half the financing book.
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The Philippines: build reliable operations while the market consolidates around you
BSP's October 2025 amendments clarified that Islamic banking units do not require separate capital and institutionalised a three-year observation period for prudential reporting.
At the same time, BPI and Robinsons Bank Corporation have agreed to merge, with integration notices and FAQs already published, the one live banking-consolidation event in the region right now. A bank building Islamic banking capability here is not building into a static market.
Product rules, staff responsibilities and reporting processes need to be established before the offering broadens, and any post-merger integration work should run as its own deadline-driven track rather than fold into ordinary product rollout.
Indonesia and the Philippines are covered here on published regulatory and market data. Neither is currently backed by Axe Finance's own regional research the way Malaysia's Islamic-financing growth driver is, so treat the scale of opportunity in those two markets as directionally strong rather than internally validated.
A platform built around the financing process
For the Head of Islamic Banking, the operational challenge sits underneath all three market stories: a digital application delivers limited value if staff subsequently re-enter information, chase documents and circulate approvals manually. Growth without a platform that keeps pace turns a market opportunity into a backlog.
For CEOs and chief operating officers, this is a platform question before it is a growth question.
Axe Finance has solved this exact problem in Islamic banking before. Maisarah Islamic Banking Services, an Omani Islamic window, wanted to replace manual processing and automate origination, risk analysis, credit write-ups and limit activation.
Axe Credit Portal delivered this through configurable workflows aligned to Maisarah's own policies: eight integrated third-party systems, 150 bank users, collateral creation and valuation, and mobile access for staff, followed by training after the Corporate and SME milestone went live.
Al Rajhi Bank in Saudi Arabia is a second reference for the same discipline at larger scale: its Corporate, Financial Institutions and SME credit platform went live in June 2020, covering credit origination, enterprise limits and collateral management.
Neither claim stands in for evidence in Southeast Asia. What they establish is that the underlying platform has done this specific kind of work, under real Sharia governance requirements, before.
Maisarah's Head of Corporate Banking reported benefits in business performance and efficiency, and explained the decision to extend automation to retail financing. The published account documents implementation and an expanding relationship; it does not quantify turnaround-time reductions or cost savings.
Control must stay visible as speed increases
For chief risk officers and Sharia committees, the priority is maintaining control as processing accelerates. Approved product requirements need to translate into explicit workflow steps, required evidence and named approval owners, with exceptions carrying clear escalation routes.
ACP's Sharia-compliant contract logic is configured through ACP Studio on the same modules used for conventional lending, not a separate Islamic system, with bank-specific document templates, documentation workflows and audit trails supporting the bank's approved process. Sharia decisions remain the responsibility of the bank's own governance bodies.
Deloitte's Islamic finance approach connects operational design with Sharia and regulatory requirements before moving to performance measurement and governance. For bank executives, this reinforces involving business, risk, operations and Sharia stakeholders from the beginning, not sequentially.
Governance requirements to make explicit
- Product rules and contract sequence for each Sharia-compliant financing structure.
- Required evidence and document templates at each approval and servicing step.
- Named approval owners and escalation routes for exceptions and policy deviations.
- Audit trails that show how the bank's approved Sharia process was followed.
Make performance measurable
For CIOs, architecture matters as much as delivery history. ACP runs cloud-agnostic, on-premise or in the cloud, through a services layer with public APIs, and every module, from onboarding through collateral to servicing, writes to one common database. For a bank running Sharia-compliant and conventional books side by side, that removes the reconciliation gap that turns two systems into two versions of the truth.
For CFOs, investment has to translate into measurable improvement. BCG reported in 2025 that more than 60% of bank technology spending supports running existing operations. McKinsey's banking productivity research recommends examining the work needed to produce specific outputs. Together, these support a business case grounded in processing economics, not platform enthusiasm.
Before implementation, establish a baseline for:
These are proposed management KPIs, not reported Axe Finance customer results. Targets should reflect the bank's starting position and financing complexity.
A practical first phase should cover one financing journey, with agreed controls, integration requirements and measurable outcomes. Teams can then refine the process before extending it.
Experience that supports your next step
Axe Finance brings a platform proven on Sharia-compliant financing under real governance requirements, and the regional fluency to know that Indonesia, Malaysia and the Philippines are three different commercial arguments, not one.
For banks in each market, the proposition is practical: apply that platform to local requirements, support the people responsible for execution, and build a financing operation whose performance executives can measure and trust.