Bank Jago Focuses on Ecosystem Collaboration to Accelerate Growth

Currently, the public is waiting for commercialization mobile banking PT Bank Jago Tbk (ARTO) which is targeted to launch at the end of March. Quotes Bloomberg, this application will offer a number of financial services, including loans. This service will also be present in the application Gojek, so tens of millions of users can automatically open accounts and manage their finances.

When announcing the entry Gojek as a shareholder, Bank Jago had emphasized its vision to connect financial and lifestyle solutions into one platform. Gradually, this vision began to be reflected in Bank Jago's efforts to embrace digital platforms from various business verticals to enter its ecosystem.

Before Gojek, Bank Jago has collaborated with Akulaku to present digital-based financing in November 2020. Then follow other strategic partnerships, such as Smart Credit and Acceleration. This number will certainly continue to grow from other business verticals, among others e-commerce retailers, travel,entertainment, to insurance.

By embracing ecosystem partners one by one, Bank Jago is showing more and more full picture in building a digital bank. This is also reinforced by the statement of senior banker and founder of Bank Jago Jerry Ng who highlighted collaboration as one of the keys to digital bank development.

Organic versus collaboration

In the 2021 Indonesia Data and Economic Conference session by Katadata, Jerry assessed that it would be difficult for banks to grow if they did not have a unique business model. Especially in the digital era, all services eventually collaborate with each other. One of the goals is to accommodate the emergence of a new generation that is digitally literate. Unlike the situation 5-10 years ago, at that time there was no such digital service ecosystem Gojek, Tokopedia, and Traveloka.

According to Jerry, this collaboration can be a key strategy to accelerate the growth of the digital bank business. He gave an example, digital banks in China and South Korea are oriented towards ecosystem collaboration so that they can pursue growth through products with a wider spectrum.

This also answers various strategic partnership actions from various verticals that have been carried out by Bank Jago since 2020. On the other hand, according to him, this model is different from digital banks in Europe and the United States which focus on developing services that are life centric.

"We have to create a unique value proposition. What we do is combine the two because they both have advantages. Bank is no longer the center of ecosystem, but part of the ecosystem. If we position ourselves properly, we will have a strategic role because whatever consumers do, in the end is payment," said Jerry.

According to him, this strategy is different from Jenius, which focuses on organic development. Therefore, he rejects the notion that Bank Jago is a continuation of Jenius' development. This assumption is often carried over considering that Jerry was previously the President Director of BTPN, who is also the brain behind the development of Jenius.

If you look at the competitive map, it seems that currently Bank Jago is only aggressive in increasing collaboration partners. However, this strategy can also be carried out by other banks that are new to digital transformation. For example, Neo Commerce Bank (BNC). Apart from entering Akulaku as a shareholder, BNC also collaborates with the platform fintech Crowdo for SME financing.

Challenge to be tech-based banks

In terms of technology, Bank Jago claims that its entire service infrastructure is digital-based. Even Jerry dared to claim to be tech-based banks first in the region. To become a digital bank, Jerry admitted to using several criteria in selecting a bank.

Artos Bank (before changing its name to Bank Jago) was considered to meet the criteria at that time because it did not have legacy and its human resources are few. With these conditions, it can freely develop technology from scratch. Of course, this criterion will be broken if the big banks that are annexed are legacy long. For example, a bank that already has thousands of branch offices.

"We see that Bank Artos does not yet have technology and few human resources. In the case of Covid-19, all banks talk about digitization. We [Bank Artos] have no problem because balance sheetsit's small. This makes it easier for us to make strategic decisions and Bank Artos meet the criteria we are looking for," he explained.

He considered, the post-pandemic conditions later could open the eyes of the banking industry in Indonesia that so far banks have built too many branch offices. "There is no need for branches. I once closed 600 branches and it was not easy. Therefore, changing the existing technology would be more difficult," he added.

The hypothesis above is relevant because it was carried out by competitors, namely by annexing BUKU I and II banks as did Sea Group, Shopee's parent company, to Bank Kesejahteraan Ekonomi and Akulaku against BNC (formerly Bank Yudha Bhakti).

By choosing a collaboration-based business model, Jerry revealed that the challenge is quite difficult in aligning the vision. Moreover, the collaboration partners are digital platforms from various business verticals that bring their respective technologies or innovations.

"Banks are synonymous with slow processes, strong bureaucracy, and always refer to risk management or compliance. Meanwhile, the startup is innovating quickly and in a hurry. But, we learned a lot Solve problems and got their new technology. Innovation and speed don't have to expense of careless, we can achieve both. So far, we feel pretty good doing it at Bank Jago."