Abstract
Innovation is one of the efforts to improve performance in Islamic banking. The purpose of innovation is not only to reduce costs, but is a reason for improving the quality of products and services. This research aims to find out the development and management of product and service innovation in Islamic banking transactions. This research uses qualitative methods, where qualitative methods are a method that uses observation or interview. The findings in this study show that the innovation of services in transactions using Bittamlik's muntahiya ijarah aims to develop accommodating market needs and consumer needs. Because this transaction is a development of the ijarah transaction, the provisions also follow the provisions of Ijarah
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