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Dr.Eng. Saiful Anwar, SE.Ak., M.Si., CA.

Handbook of Research on Islamic Banking and Finance

An Introduction To Design Science Research Methodology
(An Enginering Approach)




This is a brilliant idea introducing a quite new research paradigm to

new developing knowledge area. Combining design science methodology with
Islamic banking and finance research will give a quantum leap to Islamic
banking and finance industry.
This paradigm may support the industry in facing a very competitive
digital era when perfect and timely service will be the Caesar. It is a highly
recommended book for academicians, practitioners and whosoever interested
in Islamic banking and finance. The book guides how to transform the
theoretical answer into practical tool as a main part of solution.
Prof. Yoshiki MIKAMI

Prominent scholar of Information Science, Vice President of Nagaoka

University of Technology, Japan.

I suggest this highly qualified book for all academicians, practitioners

and everyone who is interested in Islamic banking and finance field. The book
is a breakthrough, promoting technology point of view in doing Islamic
banking and finance research.
It will undoubtedly influence the way of doing research in Islamic
banking and finance area. Instead of delivering the solutions for every problem
aroused, the Design Science approach gives direction how to find opportunity
under problematic environment by creating what so called artifact which is
acting as an artificial tool that intervenes all variables associated with the
problem. Very inspiring and a must have research handbook!
Prof. Dr. H. Fathurrahman Djamil, MA

Vice Chairman of National Sharia Advisory Council,

Majelis Ulama Indonesia


This book has indeed enlightened the readers with a new

methodology in assessing Islamic banking and finance issues which is based
on technology in order to support product innovation and to conduct other
relavant research topics. Realizing that Islamic banking in various parts of the
world is left behind in offering variety of products and services compared with
its conventional counterpart, the book may improve it by assisting the
stakeholders with a unique (but innovative and event brilliant) methodology
to accelerate the development of Islamic finance. I strongly recommend
students, academics (lecturers) and researchers in banks or other Islamic
financial instututions to reply on this manuscript to comprehend their research.
Assoc. Prof. Rifki Ismal, Ph.D

Author of Islamic Banking in Indonesia (John Wiley and Sons 2013)

This book is really a must read book for academicians, practitioners

and even everyone. Scientists and engineers believe that No one can stand
alone,a problem can not be solved by a single technology, which is also
becoming the inner spirit of this book. This book can be made only by the
author who understands deeply the philosophies of altogether the sharia
knowledge, statistical and machine learning techniques, technological
knowledge as well as the process of innovation. It is a very inspiring book for
our life, business and research.
Dr. Eng. Khoirul Anwar

Patent Holder of Satellite Technology in International ITU Standard and Basic

of 4G Uplink


Handbook of Research on Islamic Banking and Finance

An Introduction To Design Science Research Methodology
(An Enginering Approach)

Author :
Dr.Eng. Saiful Anwar, SE.Ak., M.Si., CA.

Editor :
Ulumuddin Nurul Fakhri, S.Si., M.Es. (cand)

Lay Out :
Sopyan Tsauri

First Printed, December 2015

Copy Right @ 2015 by Dr.Eng. Saiful Anwar, SE.Ak., M.Si., CA.
National Library Board Indonesia Cataloging in Publication Data
Anwar, Saipul
Handbook of Research on Islamic Banking and Finance
An Introduction To Design Science Research Methodology
(An Enginering Approach)/Saiful Anwar
Indonesia : CV. Penebar Kata, 2015.

Published By :

CV. Penebar Kata

Jl. WR Supratman, No. 44, Cempaka Putih, Ciputat Timur, Tangerang Selatan.
No. HP 087 775 864 634



Over the past decade, number of papers in Islamic Economics

literature has been growing tremendously. However, the scope of research in
Islamic banking and finance has focused primarily on substantive or
fundamental issues such as investigating something complied or not complied
with sharia. We may have focused less on issues relating to product
advancement and product innovation which solve the problem being
experienced by creating or developing the technology based application.
Few papers have been found which investigate the Islamic financial
product innovation, the success factors of information systems deployment
and the role of technology in Islamic banking growth. However, the authors
applied qualitative research methodology which overcame the scientific
problems descriptively, so that the results would have usually ended up stored
in library that is used for academician consumption only instead of Islamic
banker professionals.
Nowadays, such kind of research that offers a comprehensive
practical answer will likely be more supportive for Islamic banking and finance
companies to grow faster catching up their counterpart. Design science
approach fills the gap of natural science which delivers scientific answer and
artifact needs as practical answer. Natural science and design science are
distinguished on the basis of results of research. On one hand, natural science


describes and explains how objects or phenomenon interact with each other.
On the other hand, design science focuses on non natural objects which
created by man to meet the ultimate goals.
Currently, the financial and banking industry has been facing a digital
era which constitutes the changes of customers behavior. The condition has
challenged the industry to adapt its self by preparing significant changes in
banks business model and improving the types and quality of services. This
digital era has forced the banks to compete in minimizing the cost by digitizing
and automating as many as possible the transactions that require human
Moreover, the innovation of technology has impacted significantly
the industry. The followings are the examples of the innovation of technology
being adopted: branchless transactions such as inter-banks ATM networks,
mobile and internet payment which are focused in individual branch to retail
networks and standardized platform from internal only platform to common
standard sharable system. Therefore, the improvement of branchless
technology capability is required throughout refining the system infrastructure
and adopting wireless technology to be able to work in a multi-channel system.
In term of risk mitigation, the bank needs to mitigate all type of risks to enable
bank to grow fast and prudently as well. The technology will support the risk
mitigation activities by providing sustainable level of profit as a result of
manageable cost and increasing fee based revenue from digitalization and
automation of service.
All in all, there should be intersection of sharia knowledge, statistical
and machine learning techniques, and technological knowledge and
innovation in order to accelerate massively the growth of Islamic banking and


finance industry around the world especially in developing countries. What the
field has lacked until now, however, is a standardized and rigor methodology
that provides a methodological framework, unifying the knowledge of sharia,
product innovation and technical skill in technology.
Design science research methodology fills the current gap between
sharia scholars, bankers, management practitioners and engineers; enable
them to combine forces to collaborate in doing research to broaden up the
horizon of Islamic banking and finance knowledge.
On day to day operation, Islamic banks are burdened with a lot of
information technology (IT) based projects that are developed to solve the
problem being experienced. Unfortunately, the current research methodology
as we call it as behavioral science research approach is not well supported to
enable the project being reported scientifically. By using the design science
research methodology, the Islamic banking knowledge can get benefit from
hundred to thousand of IT project papers which has been able to be
scientifically published.
Scientific sharing about the IT project in Islamic banking and finance
will be very interesting since the industry faces various challenges in
implementing technology. Memon (2007) explained that one of the biggest
challenges is the difference implementation of regulations and practices in
different countries due to the different understanding and interpretation of
fatwa or Islamic scholars interpretation in implementing sharia complied
products or services. The condition drives to higher level requirement of the
flexibility and adaptability of technology implementation. Therefore, the
developer of application must be closely consulted by sharia advisor before
the application is fully applied. Additionally, Ahmed (2013) found that many


technology experts have been admitted regarding the complexity and

processes of sharia complied financial operation as a great hindrance to
technology implementation in Islamic banking and finance industry.
The ultimate goal of the scientific sharing about Islamic banks IT
project is to achieve the global system standardization in Islamic bank and
finance industry following other standardized items governed by standardized
organization such as Islamic Financial Services Board (IFSB) and Accounting
and Auditing Organization for Islamic Financial Institutions (AAOIFI). Hopefully,
this effort can answer the lack of clear standards faced by Islamic banking and
finance professionals in creating more innovative product and services around
the world.
According to the background explained above, this book is prepared
as a handbook for doing research using design science research methodology,
since the book offers the example of research in Islamic banking and finance
based on design science research methodology. Hopefully, the example could
provoke professional and academician to collaborate in doing research hand
in hand, combining both points of view: practical and theoretical view.
However, this book can be considered as textbook in the area of
Islamic banking and finance whereas professional and academician can gain a
fairly intimate understanding of the progress and challenges of utilization of
design science research methodology today. The book offers sufficient depth
information for beginners and experts in Islamic banking and finance area.



About The Author

Dr. Eng. Saiful Anwar SE. Ak. M.Si. CA, he is a postgraduate lecturer in
a couple of well known universities, such as University of Indonesia, Tazkia
University, Paramadina University and Ahmad Dahlan School of Economics. He
taught Islamic banking management, research methodology, strategic
management and risk management course.
He earned his bachelor degree from Accounting Department, Faculty
of Economic and Business, University of Indonesia in 2001. During 2001 2008,
he spent his time working in many great companies such as Bank Muamalat
Indonesia, Earnst and Young (Public Accountant Firm), and Bank Syariah
Mandiri. His last position was Junior Manager in Accounting Division.
In 2008, he successfully earned his master degree in Islamic banking
and finance from University of Indonesia in 18 months. He continued his study
in engineering field at the Information Science Department, Nagaoka
University of Technology (NUT), Japan. He earned his doctoral degree in 2008
and got awarded as graduation honor. During his doctoral program, He won
several scientific paper competitions such as Indonesias Islamic Banking
Research Forum Paper Competition, conducted by Bank of Indonesia, and BSM
International Business Model Competition. He is actively engaged in blind
review process for some international journals, while his scientific papers can
be found in Emerald, IEEE Xplore Digital Library, etc.


Currently, he serves as Chief Director of Postgraduate Program of

Ahmad Dahlan School of Economics; member of Risk Oversight Committee in
PT Bank BRISyariah; Executive Director of Center for Islamic Studies in Finance,
and Economic Development (CISFED Foundation); as member of The
Indonesian Association of Islamic Economist (IAEI), as Senior Researcher at
Sharia Economics and Banking Institute (SEBI School of Islamic Economics). He
is a founder of Hikaru Kledu Media Foundation, a non benefit organization in
education and health; he is also an active consultant in the field of social,
economic and financial performance.





In the name of God, Allah, the most Gracious and the most Merciful.
This book willnever be accomplished without His guidance and help.
It is entirely not possible to mention all people who gives contribution
in writing thisbook, however I would like to mention the following people for
their great support and help insteering myself during my writing process.
Foremost, I would like to express my gratitude to Muhammad Peace
Be Upon Him, myfather Azhari, my mother Maryam as my greatest
teachers, and all my teachers andprofessors; especially to, Prof. Yoshiki
Mikami and Prof. Kenji Watanabe for their encouragingsupport and guidance.
Later on, I would like to express my deeply thanks to my entire familymember.
Very special thanks go to my late father, Azhari, who always encourages me
to readand to recite the holly book, Al-qoran. I will never forget to pray for
you to rest peacefully inyour grave yard. The special thanks also go to my
mother who take care all her children aloneafter father passed when we were
at a very young age. She never forgets to read many storiesfor us during
sleeping time and challenges us to @y as high as we can to achieve our dream.
Myfavorite stories are about Gods messenger, Muhammad PBUH and his
Very special thanks go to my wife, Dr. Flori Ratna Sari, Ph.D. During


her hectic activitiesin doing research, lecturing activities, and taking care our
two boys: Ismail Akhtar Hikaru andYusuf Fadhlurrahman; she consistently and
persistently encourages me to %nish writing thebook as soon as possible.
Last but not least, I am so thankful for my awesome brothers and
sister: MiftahulAnwar, Ph.D, Ulumuddin Nurul Fakhri, S.Si. M.Es (Cand) and
Hi%zah Nur, S.Psi, M.ed. for beinggood competitors in education as our
mother expected.




This book is especially dedicated

to my wife and our lovely boys; Ismail
and Yusuf. They have been my inspiration
and motivation to not stop giving
contribution to the Ummah