Bank Jago Prepares Sharia Services and MSME Financing This Year

In addition to the gradual integration with the ecosystem Gojek, PT Bank Jago Tbk (IDX: ARTO) is also preparing to increase the scope of digital banking services in 2021.

The market segments targeted by Bank Jago this year include: middle income and mass market, including SMEs and retail (consumer), both conventional and sharia.

Bank Jago President Director Kharim Indra Gupta Siregar revealed that there were two main focuses that were prepared, namely digital-based sharia services and lending through digital platforms for MSMEs.

The following is a continuation exclusive interview DailySocial with Kharim Indra Gupta Siregar and Bank Jago Commissioner Anika Faisal.

Digital Islamic banking

Currently, Bank Jago is exploring whether this digital sharia will be present in a new application or just an additional service in the existing application, namely the Jago App. There are several things that the company is considering regarding this development.

According to Kharim, so far sharia banking products in Indonesia tend to be associated as different products from their parent companies, which in fact are conventional banks. This factor makes the development of new sharia services also involve using conventional methods.

The market opportunity for Islamic banks is also very large considering that penetration in Indonesia is still low. Referring data Financial Fervices Authority (OJK), the market share of sharia banks was only 6,33% as of October 2020. The increase is not too significant compared to the market share in 2017 which was only 5%.

In addition, during this time banking services mobile devices Sharia mostly uses the USSD menu considering that the digital ecosystem at that time was not yet ready, smartphones and airtime still quite expensive.

He assesses Bank Jago's position as tech-based banks providing space for companies to utilize 100% of the same capabilities in developing sharia banking platforms. If it is present in application form, the party will duplicate the Jago App's Pocket (Kantong) feature on the sharia platform.

"Currently, we are going through various processes, such as approval and others. We will have it soon. We see there is a good opportunity where sharia users can get similar services on the Jago App. We provide everything capabilities there," said Kharim.

Meanwhile, Anika Faisal believes that currently there are no sharia banking products in Indonesia that are capable of providing this user experience the good one. According to him, these various considerations are to ensure the company can provide product proposition which is as good as Jago App.

"I have my own preferences for sharia services, not the context [service preferences] of usury or not. Unfortunately, mobile banking Sharia in Indonesia cannot yet be given convenience. That's why I challenged whether Bank Jago could have the product they had convenience the good one. "The [shariah] products are basically the same, but what's important is the service," he explained.

Digital lending for SMEs

In 2020, the number of MSMEs in Indonesia is estimated to reach more than 65 million, which is recorded as contributing more than 50% to Indonesia's GDP, and absorbing 97% of the active work budget in Indonesia.

The Bain & Company report in 2019 noted that there were 92 million people or 50% of the total population who did not have access to banking services (unbanked). 25% or 47 million of them do not have adequate access to banking services (underbanked).

Bank Jago sees promising potential in these two segments. In the 2020 financial report, Bank Jago said it would build a financing business with a digital ecosystem managed through Partnership Lending (Business Finance Solution). Since last year, Bank Jago has collaborated with fintech platforms to distribute financing.

Some of those that have been announced include Akseleran, Akulaku Finance, and AdaKami.

This collaboration is expected to speed up the customer acquisition process which Bank Jago defines as the productive pre-prosperous segment. This segment is considered to have passed the poverty level, but still needs financing. They are targeting lending this will be distributed significantly across those segments.

"We will prepare products/services for the entrepreneurial segment because we see great potential in this segment of business actors who are not yet fully formalized. We are going to announce and it's in progress. After rights issue secondly, we get strong capital for pursue growth lending Karena legacy product lending there are not many of us. So we can focus more on partnerships. Currently, we have partnered with ten lending sites,said Kharim

Overall, he said, Bank Jago achieved good growth in loan distribution. According to his records, from the end of 2020 to the first quarter of 2021, Bank Jago has disbursed loans from around IDR 900 billion to IDR 1,3 trillion with an increase of 40%.

Kharim revealed that his party would collaborate with partners to provide products lending on the Jago App to support the process underwriting and determine whether prospective customers are worthy of being given a loan.

"Currently, customers Gojek PayLater products are already being offered. This means there are analytics behind it to provide lending to customers. For this model, we want to expand what can be provided through the product lending. This also depends on the ecosystem, such as Gojek have an ecosystem of users, partners driver, and partners merchant. Each has a different approach. We can do this after the integration of Jago App and Gojek walking," he explained.