Track: Modeling and Simulation

Abstract

In this paper, the literature on digital transformation and leadership in Shariah Bank was surveyed.  The aim derived from doing the relevant literature review is to develop a research model to guide empirical studies. Shariah bank has comparative advantages compared to the conventional bank which is presented by the unique product, different structure, and different concept. Shariah bank has unique products such as product without riba which defined as interest, investment prohibits goods or services that are contrary to shariah laws. The financial transaction in shariah bank demand that risk must be shared.  The symmetrical risk and return distribution on participants must be applied. All activities in shariah bank must be monitored and advised by a board of shariah experts to ensure shariah bank activities are in line with shariah laws.  Eventhough have comparative advantages, but in reality, shariah bank can not be a leader in the banking market compared to conventional bank.  In terms of total assets, market share, literacy, and inclusion index, shariah bank still left behind the conventional bank.  In the digital area, eventhough shariah banks already have digital banks but overall in the competition of digital banks, the conventional bank still stays ahead compared to shariah banks.  This study describes and analyzes this phenomenon from the source factor of competitive advantage of shariah bank which are digital transformation and leadership.  The phenomenon of leadership in shariah bank can be shown through the composition of the board of directors in shariah bank.  Most shariah bank BOD  are from the conventional bank which impacted the decision or business strategy of shariah bank.  To investigate these phenomena, this study collects and analyzes the issues from literature (research journal, models, concept, and theory).   The result of this literature review demonstrates a significant relationship between digital transformation and leadership as the source of competitive advantage in shariah bank.  As for originality this paper as the best of authors’ knowledge that the study on digital transformation in shariah bank is limited.