This research aims to highlight, from the perspective of competitive advantage, the difference between Islamic and conventional banking. The competitive advantage is based on capital’s preference. The sample of this study was 120 commercial banks but only 49 banks, accounting for 52% of banks in Indonesia, completed and returned the questionnaire (response rate 39%). The research focused on the top management team and data was collected using questionnaires. The questionnaire was based on a variable construct, taking into consideration the bank’s competitive advantage and innovation performance among others. The results show that capital is the only factor of advantage for Islamic banks.