Are Indonesian banks' digital journeys paying off?

Lenders are introducing self-service lounges, cardless withdrawals and biometrics to grow their millennial client base.

At the Jakarta Leg of the 2019 Asian Banking & Finance Retail Banking Forum, about 50 banking executives and thought leaders discussed case studies of their respective digital journeys and strategies on how to deal with increasingly different perceptions of traditional banks and open collaboration with fintechs.

By integrating account opening into their banking app, Bank Central Asia’s (BCA) was able to boost productivity five times the figure in their physical branches, said Vera Eve Lim, Managing Director and Chief Financial Officer at BCA.

By investing in digital initiatives and big data, the bank was able to address the need to adapt to a younger banking generation that have a different perception of banks compared to their parents. “Business is determined not by product but by customer experience and behaviour,” Lim said.

Indonesia has over half of its 260 million population under the age of 40 which represents a growing tech-savvy client-base that cannot be tapped through traditional measures. CIMB Niaga’s Lusiana Saleh, branch banking business development head, observed weaker customer participation in their branches and that 96% of their financial transactions are now performed through digital channels. Consequently, the number of their digital self-service lounges has risen to 28 to complement its digital bank initiatives such as new account opening and cardless withdrawal/deposit.

On his part, Sutono Halim, vice president of DBS Indonesia, noted that the productivity of their digibank has grown 20 times in 2017-2018. To capitalise on this growing business, Halim said that DBS had introduced biometrics technology, financial monitoring, and credit card management, and recently launched making cross-border transfers in seven currencies across 20 countries.

Meanwhile, Andreas Kurniawan, EVP - head of digital banking & transformation, OCBC NISP, discussed how the bank is targeting Indonesia’s young, affluent consumers by revamping their traditional branches into “premium guest houses” that are integrated into luxury hotels across Jakarta. The new branch model injects hospitality principles into the customer journey, he said.

On the other hand, Rosalina Dewi Purnoko, SVP, secured lending & joint finance product, department head, Commonwealth Bank, argued that banks should be able to apply Marie Kondo’s organisation principles into their offerings. She illustrated this by saying that with 190 mutual funds available in Indonesia, it can be tempting for banks to offer everything on the table and create confusion for customers rather than giving them what is a surefire fit for their financial needs.

Evan Wiradharma, partner at Ernst & Young, noted that whilst consumer perception of traditional banks wanes, global investment into fintech continues to reach new heights, even hitting $62.4b in 2018. Although this poses a challenge to traditional banking players, he said this opens room for heightened collaboration with the very players threatening their business, highlighting that fintechs are more friend than foe. “Whilst sometimes viewed as industry disruptors, much of fintechs’ activities are actually enabling the future of financial services,” he said.

Lim Jew Kee, SVP business development & marketing, Neurogine, shared how their fintech company is challenging the bank expansion process that typically takes two to four years by extending e-wallet coverage to China and the ASEAN. Through their nMPex technology, merchants and customers’ withdrawals can be connected through the bank wherever they are.

Another fintech called Big Data Scoring attempts to transform the credit scoring process, which hasn’t changed since the 1980s, by leveraging big data collected from 5,000 additional data points in order to generate credit scores for customers in as little as two seconds, said Kersten Eero, Senior Business Develop Manager. It currently has an ongoing partnership with Indonesia’s Amar Bank.

The Jakarta Leg of the ABF Retail Banking Forum was held on 7 May 2019 at Fairmont Jakarta. For inquiries, please email [email protected].