BRI Opens Opportunity to Form Digital Bank

It seems that BRI will follow a number of banks in Indonesia that are planning to form a digital bank. Previously, quoting Dataword, BRI President Director Sunarso had revealed that his company opened up opportunities to convert its subsidiary into a digital bank.

There are two BRI subsidiaries engaged in the banking business, namely BRI Agroniaga Tbk (Agro) and BRI Syariah. Sunarso said that it was impossible for BRI Syariah to be converted into a digital bank. "But BRI Agroniaga is very possible," he said some time ago.

Contacted DailySocial, Director of Digital, Information Technology, and Operations at BRI Indra Utoyo also confirmed this. He said that the company is still finalizing its current concept and strategy. "Yes, there is a point in [becoming a digital bank]," he said in a short message.

BRI Agro has the opportunity to be converted considering that the company has already launched platform digital lending betel nut (Quiet Borrow). However, according to him, since the beginning, BRI Agro was not immediately merged into a digital bank because BRI as the parent company wanted to conduct trials in the market.

"[The initial approach] is through Pinang products as a test cases for digital attacker. Currently, Pinang is the only loan solution that fully digital from the banking sector," he said.

For your information, Pinang is a platform digital lending which was released in early 2019 by BRI Agro. In addition to working capital, Pinang can be used for various needs ranging from education costs, treatment, to daily needs. Based on the 2019 Annual Report, BRI Agro noted that Pinang's credit distribution had reached Rp30,6 billion with a total of 7.331 debtors.

Pinang is also BRI's new business model that refers to the strategy new digital banking proposition. This service is the first digital loan platform in Indonesia that offers e-KYC with a digital verification, digital scoringand digitalsignature.

Furthermore, Indra said that the company's digital strategy will continue to refer to the identity of the BRI Group which targets the micro and Small and Medium Enterprises (SME) segment.

"Related positioning new to Bank Agro, there will be an answer at the right time. We can't answer right now [whether there are new digital products other than Pinang]. However, our digital strategy will remain go smaller, go shorterand go faster. This means that we are entering a smaller segment, namely ultra micro," said Indra.

Some time ago, Indra considered that digital banks would be maximized if they combined the advantages of physical networks, not only digital services. Therefore, he considers that there is no need for a dichotomy between digital and non-digital banks considering that BRI has so far provided more value than this concept through its products.

The realization of digital banking and its challenges

Until the end of this year, there are at least two plans digital bank waiting to be realized. Digital Bank BCA and Bank Jago (formerly Bank Artos) are targeted to launch in the second semester of 2020.

BCA Digital Bank will be Branding new from its previous name, namely Bank Royal. Its target market is the retail and SME segments, different from the main portfolio of its parent who plays in the corporate sector.

Meanwhile, Bank Jago will target the middle and low-income segments mass market as the main target. The company will also collaborate with digital platforms in various business verticals, such as E-commerce, ride hailingand p2p lending.

Meanwhile, PT Yudha Bhakti Bank (BYB) finally officially changed its new name to PT Bank Neo Commerce Tbk through the Extraordinary General Meeting of Shareholders (EGMS) on July 30, 2020.

Bank Yudha Bakti President Director Tjandra Gunawan said that the change in the company's new name was one of the business and digital transformation strategies for the 2020-2022 period.

Institute for Development of Economics (Indef) observer Bhima Yudistira, assesses the realization of digital banks will have a big impact on Indonesian people, especially those who have not been touched by financial products.

However, the presence of digital banks also needs to be accompanied by education in various circles, such as SMEs and rural areas. "Here, the importance of developing a digital bank must be accompanied by the addition of internet network access to remote and outermost areas," said Bhima.