Indonesian Banking Prepares Its Strategies Facing FinTech Development
The Financial Services Authority (FSA) has plans to regulate the implementation of peer-to-peer lending (P2P) for financial technology - Photo by SolusiManajemen

JAKARTA (TheInsiderStories) – The Indonesian financial technology (FinTech) is continues to grow rapidly, even though it developed in the past few years. Morgan Stanley reported the number of digital payment transactions in the country will reach US$ 50 billion in 2027.

This value is reasonable, because in 2018, the value of electronic money transactions that are part of digital payments reached Rp 47.19 trillion or $3.42 billion.

Morgan Stanley revealed that of 1,582 respondents, 20 percent of them preferred to use digital payment services from FinTech companies compared to the banks, telecommunications companies, or e-commerce players.

Seeing this, a number of banks regulated its business strategies so that not eroded by technological developments. The tactics used are various, starting from acquiring the FinTech company, cooperating with the fintech company or forming its own financial innovation.

PT Bank Rakyat Indonesia Tbk (IDX: BBRI) for example, through its subsidiary PT BRI Agro Tbk (IDX: AGRO) formed its own online loan application, namely Pinang. Pinang is a digital lending product from BRI Agro and is also the first application-based bank loan product in Indonesia.

Managing Director BBRI Agro Agus Noorsanto said the launch of Pinang was the Company’ innovation in facing the digital era, so that the services prepared were more advanced and in accordance with the needs of today’s customers. This product will target the ultra-micro segment and open opportunities and expand the reach of BRI at this time.

By combining digital technology, Pinang has a submission process until disbursement of less than 10 minutes, with a flexible tenor of 1 to 12 months.

Meanwhile, vice president director of the bank Sunarso added, that the presence of Pinang is expected to be a solution for people who are worried about the growing development of illegal FinTech. This Pinang reinforces BBRI’ commitment to play in the digital arena.

While, PT Bank Mandiri Tbk (IDX: BMRI) is reviewing the lender’ steps to enter the online business. Thomas Wahyudi, SVP of Transactional Banking Retail Sales Bank Mandiri said, before launching this  services, the bank had to take several considerations such as regulatory permits and form of the business whether its built by the company or cooperate with FinTech company.

Previously, Bank Mandiri had cooperated with two peer to peer lending companies, PT Amartha Mikro Fintek and PT Lunaria Annua Teknologi (KoinWorks) to finance micro, small and medium enterprises (MSMEs) and online sellers. Through this collaboration, thousands of MSMEs scattered throughout Indonesia are expected to strengthen their working capital and market expansion.

Furthermore, PT Bank Central Asia Tbk (IDX: BBCA) chose to develop its own digital banking through providing capital expenditure of Rp 5.2 trillion this year to enhance its hardware, software, and security development.

Unlike the other banks, PT Bank Negara Indonesia Tbk IDX: BBNI) said it would collaborate with startup companies in order to accelerate business growth today. This collaboration will be carried out through venture capital companies that are in the acquisition process. According to him, this venture capital that will work with start-up companies includes financial technology that has an ecosystem that fits BNI’s business needs.

Then, PT Bank Tabungan Negara Tbk or BBTN plans to develop FinTech which can serve subsidized housing loans. However, the company is still discussing about it because there is no other fintech housing loans previously.

US$1: Rp14,000

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