Neo Commerce Bank: Phase Two of Transformation Glues "User Stickiness" 18 Million Customers

In its first year operating as a digital bank, PT Bank Neo Commerce Tbk (IDX: BBYB) has registered milestone significant. Until the first semester of 2022, the BNC application has been downloaded 26 million times, its customers have reached 18,5 million with a Monthly Active User (MAU) of around 3 million.

This achievement cannot be separated--one of them--from strategy Gamification in the application to provide attractiveness and engagement more about the concept ofdigital banking in Indonesia.

If last year the Managing Director of Bank Neo Commerce Tjandra Gunawan spoke top of mind, this time he revealed a number of important points related to efforts to strengthen business fundamentals, develop features and products comprehensively seamless, and strategies to improve user stickiness.

Tell me about BNC's transformation in the last two years?

Answer: The first time I joined in March 2020, I was faced with a combo challenge. Covid-19 came to Indonesia. Indeed, the pandemic has encouraged digital acceleration. However, at the start of the pandemic, many people withdrew funds from small banks because they wanted to find safety when the crisis occurred. Meanwhile, at that time Bank Yudha Bhakti (BYB) was still a BUKU I bank wandering due to limited liquidity.

However, without that, my challenge would actually be quite difficult. Founder Akulaku William Li asked me to transforming Bank Yudha Bhakti (BYB) into the largest digital bank in Asia in three years. Just when we were thinking about the strategy, the second challenge came, namely the OJK issued regulations regarding minimum core capital.

What did we do in the last two years? We focus on the plan, we execute and... deliver. For me, ideas are important, but what is much more important is the execution. I got out into the field, got involved in the details, and... make sure execution occurs. For neobankers (BNC employees), they haven't seen what I see. As leader, I have to lead them towards our vision.

BYB was previously a pension bank. Our transformation is not just a leap, however quantum leap. Lots step, but must be fast. So, mindset important for deliver to the market. There also needs to be one binding thing so that the vision can run, namely culture. We changed it culture from previously BYB's bureaucratic and manual work style. We instill values ​​in Neo Culture.

Additionally, how to search talent right in the right position. Sometimes I find talent good, but there is no position yet. We put it in, create a position, because this is for the future.

BNC took note milestone significant in two years. For banks, is this achievement too soon?

J: Depends, whether the bank has prepared itself or not? For example, there are two people farming in a place where it rarely rains. Both of them prayed for rain. The difference is, farmer A prepares the land, farmer B doesn't. When it rains, who is better prepared? Well, we're not just hoping, we've been preparing ourselves since 2020. Fast growth will be dangerous if it's not accompanied by further preparation.

Last year, I led leaders meeting. I said at that time, "we've been blessed with more than 14 million users. It seems like mindset we have to return to point zero. Don't celebrate victory too early. It's not there yet!". In 2022, we need something new. What are we gonna do? I encourage you to Switch ke mindset early, as if we didn't have any users yet. work hard again, so don't get carried away. 18 million BNC users currently become fuel we.

I think 75% of our vision and mission have been executed. It is inevitable that there will be evaluations, but we will continue to improve. So, what does this 25% cover? I got a question from an analyst at a leading securities company. When will BNC be profitable? I ask again, are banks transforming [only] pursuing profitability?

Our sacred mission is to reach out unbanked and underserved. That's why we became digital. Proven for decades in the sector bricks and mortar, banks that rely on branch offices have failed to reach them unbanked and underserved. The statistics speak. Indonesia is an archipelagic country so using conventional styles is not effective. However, since the last few years, the government has encouraged the development of technological infrastructure.

We are not simply become a bank profitable just. If we just pursued that, we wouldn't need to transform. Look at the financial report in 2020, we have profit. Chasing profitability of course, but that's not number one.

What is the main hypothesis BNC adopts the model gamified banking?

J: We did an analysis, as many as 86% of our total users are millennials. What interests them? They like it something fun, not boring. From here, we try to enter with Model Gamification. If we explain a deposit product with 8% interest, their response might just be that they are interested. But yeah, it stops there.

We use it Gamification to introduce our products. We direct them to try out the features by doing a number of things task. For example, invite friends to get coins. So, more without having to patronize them. As a result, our products are starting to become known, the number of our users is growing, and our deposit services are growing saving go on. We also created Neo World and Neo Business where BNC users can interact with each other and promote their business. We try connecting people.

About benchmarking, we are inspired by models Gamification [bank] in China. Lots of experience or user experience which we adopted and packaged according to Indonesian culture. For example, Neo Angpau is packaged to match the feel of Eid.

What is your next strategy with milestone this?

J: As the market grows, digital banks or banks that have digital arm and Ddigital channel would be an option. We choose to focus on milestone because we have to provide something fundamental, back to our user base.

So far we have launched Neo Loan, Neo Gold and Remittance products. To provide remittance services, banks must become foreign exchange banks. We thought how close gap considering that the requirements to become a foreign exchange bank take at least 1,5 years - 2 years. We also collaborate with DigiAsia.

Then, we are preparing the feature cash withdrawals without card or cardless. If you use a card, it won't work spirit digitalization. Users can withdraw cash at convenience stores, such as Indomaret or Alfamart, and ATMs. We try to simplify the method so that users can withdraw money anywhere and anytime. Now it is still in the development and waiting stage approval.

We will continue to create seamless experience. BNC is a digital bank that is fully e-KYC and uses biometrics. We don't use account opening video calls. We will also expand collaboration to: open ecosystem. Maybe there is a digital bank that only focuses on the ecosystem that the group owns. We are open to other ecosystems. We believe that the key to digitalization moving forward is collaboration, not competition.

How do you upgrade user stickiness users and WANT?

J: We map user we divided into four clusters, including (1) cluster of users whose hobby is collecting coins referrals, (2) savings and deposit product user cluster, (3) transactional user cluster, like top up and make payments, (4) user clusters loans, and (5) investment clusters.

For the sake of improving user stickiness, we believe clusters 3, 4, and 5 will be the driving force for BNC. For cluster 3, we are preparing the QRIS feature which will launch soon. This cluster will increase user utilization so that more commits with the BNC application. In cluster 4, we will add other investment options, such as mutual funds, which are targeted to launch in the third quarter of 2022.

Currently, Neo Loan is new for the retail segment. However, we plan to enter MSMEs too. Outside of Neo Loan, we have actually entered MSMEs through a scheme channeling and approach direct. This is the reason we present Neo Business to connect users with business people. Our ecosystem still is clean, we have data for approach the right user.

Actually, our technology is ready, but we have to wait approval OJK for several products. With this strategy, we are targeting the number of BNC users to reach 28-30 million this year.

Are there any plans to increase capital this year?

J: I have to clarify regarding reports in the media that say we are looking for new investors. More precisely, many investors approach who are interested in performance us, both domestic and foreign investors. However, this is still the case undisclosed.

Look, Indonesia is an attractive market share with the fastest digital growth in Southeast Asia. During the pandemic, without realizing it, our [behavior] became more digital. This is what makes investors interested. So don't be surprised if someone buys a bank or invests in a bank.

I believe in fundamentals. Invest for the long term if you believe in business fundamentals. This is what I offer to investors. We ShowCase our performance. As of December 2021, we have disbursed IDR 4 trillion in credit and the Net Interest Margin (NIM) reached 5,15%. In the first semester of 2022, loan disbursement rose to IDR 7 trillion and NIM reached 10,16%.

Indeed, the first quarter performance was not good. We lost IDR 416 billion. To be fair, our loss fell 54% to IDR 194 billion in the second quarter. Our income goes up, expenses go down. However, we hope we can profitable from month by month.

Akulaku sebagai controlling shareholders true, true work hand-in-hand with us so that BNC becomes the leading bank in Indonesia and is taken into account in Asia. Recently Akulaku also be unicorn and this opens our path wider.