JAKARTA (TheInsiderStories) – Digital technology will continue to transform the banking landscape of Indonesia and it will grow considerably become increasingly crucial in building loyalty and generating growth for financial institutions, told a new findings from McKinsey & Company today (02/12).
According to the company, the Indonesian consumers are increasingly open to digital channels and digitally active consumers bring more economic value to the Indonesian bank.
Mckinsey noted, there are three trends that will continue to shape retail banking in Indonesia such as the diversification of banking relationships, the increasing receptiveness of consumers to digital propositions, and the increasing value of digitally active consumers.
“With digital technology set to continue to transform the banking landscape in that might, digital channels will become increasingly crucial in building loyalty and generating growth for financial institutions, with customers actively using these channels being seen as more valuable in an economic sense, to banks,” said the company research in a written statement.
The McKinsey’ survey show that digitally active consumers bought twice as many banking products in 2017 compared to non-digital consumers, and currently own 1.5 times more products than non-digital peers.
Based on data and insights from a similar survey done in 2017, surveyed 900 consumers of financial services across Indonesia on their banking habits to help better understand the dynamics of the personal financial sector.
While, the Indonesian research shows a continuation of the shift to digital channels observed in the 2014 version of the survey. Digital penetration is 1.6 times the 2014 rate, and now reached 58 percent, in line with the rest of Emerging Asia.
So far, monthly usage of digital banking channels in Indonesia has grown twice as fast as other Emerging Asian markets over the past three years. Besides, 55 percent of non-digital customers expressed the likelihood to use digital banking in the next 6 months, the second highest figure for any country in Emerging Asia, after Myanmar.
The company report also points to an opportunity for purely digital players in the market with 50 percent of respondents considering the shift to a bank without a physical presence. The majority of those respondents also expressed confidence that they would shift 25 percent to 50 percent of their balance to a pure digital bank, though a branch network is still important.
While these findings show that competition from within outside of the banking sector will be intense, banks should continue their digitization efforts, and move quickly to attract new customers and build loyalty in their existing customers.
“Several factors combined to accelerate the migration to digital channels in Indonesia. But the growth of e-commerce, an increasing of the internet and smart-phones and a strong digitization must push by Indonesia. The bank can explain online banking and encourage customers,” said the senior research.
So more, McKinsey report also highlights the current rapid shift towards digital banking in Indonesia, and, presents opportunities for Fin-Techs and new initiatives, as well as the incumbent banks to enhance engagement and add value.
Written by Daniel Deha, Email: email@example.com