SOP Standardization as a Governance Instrument: Strengthening Governance and Sharia Compliance in Islamic Financial Institutions

Abstract

This study examines Standard Operating Procedure (SOP) standardization as a governance instrument for strengthening Good Corporate Governance (GCG) and Sharia compliance in Islamic Financial Institutions (IFIs). Using a qualitative descriptive-normative literature review, data were drawn from 28 sources (2014–2026) and analyzed through a thematic coding framework, grounded in Agency, Stewardship, and Stakeholder Theory. A comparative case analysis contrasting the procedural breakdown at PT BPRS GP Medan with digitalized SOP practices at Bank Syariah Indonesia and KSPPS Nuri Jatim shows that rigid, automated SOP enforcement rather than manual, discretionary procedures is decisive in preventing Sharia agency fraud. Benchmarking against AAOIFI, IFSB, and Bank Negara Malaysia standards further reveals that Indonesia's predominantly ex-post supervisory model could be strengthened by a more proactive, line-management-based three-lines-of-defense framework. Findings indicate that SOP standardization enhances transparency, accountability, internal control, and Sharia compliance, functioning most effectively when systematically enforced and resistant to manual override. This study offers actionable implications for OJK, IFI management, and the Sharia Supervisory Board (DPS), while acknowledging its reliance on secondary, documentary case evidence rather than primary empirical data.