Indonesia's Digital Banking Industry in 2021: influx of technology companies, regulatory blueprint




< strong > editor's note: the article is selected from krasia, with the original title < / strong > < a href=“ " rel="noopener noreferrer" target="_ Blank "> < strong > Indonesia's Digital Banking Sector sees rapid development in 2021 | krasia year in Review < / strong > < / a > < strong > Author: khamila Mulia < / strong >

Maya nawangwulan is an employee of a start-up enterprise in Jakarta. She often uses various payment platforms, including gopay, ovo, shopeepay and so on. She is also happy to try new financial technology products. In June, she opened an account in line bank. At that time, line bank had not been officially launched. If she registered in advance, she could get 300000 rupiah (about US $21). Line bank is a digital Bank supported by Hana Bank

"The registration process is very simple. I just fill in my personal information, upload ID photos and self photos with ID. then the customer representative contacted me to verify the information. A debit card arrived at my house two days later." Nawangwulan told krasia

She also registered two deposit accounts with line bank. "This is my first time to open a deposit account. What attracts me is that the deposit amount of line bank is as low as IDR 1 million (about US $70), and the annual interest rate is about 4%, which is higher than many traditional banks." She is very satisfied with the convenience and product diversity of Digital Banking

< figure aria describedby = "caption attachment-137645" class = "WP caption alignnone" id = "attachment_137645" style = "width: 1024px" > < img ALT = "b2b2b2021 Digital Banking in Indonesia: influx of technology companies, regulatory blueprint" class = "wp-image-137645 size large" height = "502" loading = "lazy" sizes = "(max width: 1024px) 100vw, 1024px" SRC=“ " srcset=" 1024w, 300w, 768w, 1536w, 2046w "width =" 1024 "/ > < figcaption class =" WP caption text "id =" caption attachment-137645 "> publicity map of Indonesia line bank official website < / figcaption > < / figure >

Like nawangwulan, many Indonesians began using digital banking services in 2021< a data-type="external" href=" " rel="nofollow" target="_ Blank "> according to a report by finder < / a >, about 24.9% of adults in Indonesia have digital bank accounts. By 2026, the utilization rate is expected to increase to 39%

"It's not easy to get a banking license anywhere in the world. But the wave of Digital Banking in Southeast Asia provides companies with opportunities to enter the financial industry." Zennon kapron, director of kapronasia, a financial technology research and consulting firm, told krasia

Therefore, it is not surprising that many technology companies are involved in Digital Banking. Kapron said that companies such as line bank, gojek, akulaku and welab plan to provide a complete set of digital banking services. These are digital priority companies with a large amount of data that can be used to create a highly personalized banking service experience

Indonesia's Digital Banking industry has developed rapidly in the past 12 months. After gojek integrates the bank jago service, users can open bank accounts in gojek's super app. Many other companies have also launched digital banking services. New players include seabank of Donghai group, Neo + belonging to akulaku acquisition bank Neo commerce, line bank of Asiana bank, Blu of BCA digital, etc. Some of these banks also access e-commerce applications or cooperate with e-commerce to become the payment methods of these platforms, such as seabank and shopee, BLU and blibli

It is reported that bukalapak, an e-commerce company, will also cooperate with Standard Chartered Bank to launch digital banking services, while grab will form a joint venture with EMTEK group to set up Digital Banking in Indonesia

"The whole banking industry is embracing the digital process, including us. Bank Neo Commerce (BNC) has only been established for one year and is still improving its services. The digital process of the banking industry will continue to deepen and new digital banks will appear in the next few years." Tjandra Gunawan, President of BNC, told krasia

He added that it only took users "two minutes" to open an account at BNC. In addition, BNC also provides savings products with an interest rate of 6%, and users can transfer money by using their telephone number. After going online in March, the download volume of BNC application has exceeded 10 million


About 66% of the 275 million Indonesian residents do not have a bank account at present. There are more than 60 million small, medium and micro enterprises (MSMEs) in Indonesia. According to the data of Bank of Indonesia, about 70% of them cannot obtain credit. Digital Banking is expected to provide these individuals and enterprises with new options for access to financial services

"Inclusive Finance is a long-term process. In order to serve people who do not fully enjoy financial services, our strategy is to cooperate with different Internet companies, especially lending fintech companies. We believe that cooperation in providing digital products suitable for their needs is the key to promoting Inclusive Finance," Gunawan said

In order to create an orderly and safe ecosystem, the Indonesian Financial Services Authority (ojk, otoritas JASA keuangan) introduced a series of new regulations in August. Ojk allows digital banks to operate without branches or only online, but they must have a registered headquarters in Indonesia. Digital banks can be transformed from traditional banks or new entities. For newly established banks, the regulation requires a minimum capital of idr10 trillion (about US $698 million)

Ojk also depicts a < a data type = "external" href=“ " rel="nofollow" target="_ Blank "> the blueprint for Digital Banking < / a >, which includes the working principles of five areas: data control, technology, risk management, cooperation and institutional arrangements

But the development of Digital Banking also has challenges. Low financial literacy and insufficient Internet infrastructure outside big cities are the biggest obstacles in the popularization of Digital Banking

"Despite the increase in smartphone penetration, user education remains a key challenge in terms of device use and responsible use of digital financial services. The government is trying to fill this gap, but it still needs time," kapron said

Kapron believes that the competition in Indonesia's Digital Banking industry has just begun, but there will be more innovations in products, services, integration with fintech and consumer platforms in the future

"No matter how successful these digital banks will be in the future, they will still face fierce competition in the short term."

For companies entering digital banking, the key is to provide differentiated services. "Traditional banks have large balance sheets and profits that can be used to remain competitive. It remains to be seen whether new competitors have the same ability," kapron said

(Shi Yi)

Compiled by Zhao Xiaochun

Figure unsplash, company's official website


the content of the article is created by the author, who is responsible for the authenticity, accuracy and legitimacy of the content. Haiyi advocates respecting and protecting intellectual property rights. Without the permission of the author and / or this website, it is not allowed to copy, reprint or use the content of this website in other ways. If you find that there is a copyright problem with the articles on this site, please contact us , we will verify and handle it in time