Indonesia is home to one of the world’s largest unbanked populations, but the rapidly increasing digitalization of everyday life is a golden opportunity to change that, the top executive of lender Bank BTPN told Nikkei Asia.
Henoch Munandar, Bank BTPN’s president director, said the coronavirus pandemic has accelerated smartphone penetration in Indonesia, resulting in growing opportunities in digital finance.
“Financial inclusion is a breakthrough through digitalization supported by smartphone technology to ease the unbanked society wherever they are,” Henoch said.
He added that not only millennials but also older people learned how to bank digitally during the pandemic. In addition to the digital shift, he cited Indonesia’s “demographic bonus”—its cohort of people of a “productive age is very huge,” which offers “a big opportunity.” The nation has the world’s fourth-largest population, with more than 270 million people.
In Indonesia—Southeast Asia’s largest economy—more than 80% of the population is unbanked or underbanked, according to research by Google, Temasek and Bain & Co. published in 2022. The unbanked are people without bank accounts, while the underbanked have accounts but lack sufficient access to services like credit. It adds up to a huge untapped market for the kind of banking services that Bank BTPN and others are trying to fill.
Bank BTPN merged with Bank Sumitomo Mitsui Indonesia in 2019 and as of July was the country’s 12th-largest bank by total assets. After the merger, its total assets doubled to nearly IDR 200 trillion (USD 12.7 billion). The merger with the local unit of Japanese megabank Sumitomo Mitsui Banking Corp. (SMBC) enabled them to offer a wide variety of financial services in Indonesia. Bank BTPN has been strong in retail banking, while the SMBC unit mainly caters to corporate clients. Bank BTPN’s customer base totals about 10 million.
It offers digital banking services through its Jenius app, which has been popular among millennials. But Henoch said that after the pandemic hit, it also attracted senior consumers.
As the global health crisis has waned and the world has reopened to tourists, Bank BTPN is expanding currency exchange services through Jenius to the increasing number of Indonesian middle-class travelers. It now provides nine currencies, including the recently added Chinese yuan and Thai baht. Henoch said the feature is “one of the most popular product[s] now in Jenius” for Indonesia’s outbound tourists. However, he did not disclose a specific target figure for users of the app.
Amid the huge fintech opportunities in Indonesia, Bank BTPN is facing intensifying competition with other players. For Instance, delivery and ride-hailing apps in Southeast Asia—such as Indonesia’s Gojek and Singapore’s Grab, as well as ShopeePay, a unit of Singapore tech giant Sea Group—also offer digital payment services and are targeting the unbanked and underbanked. And banks such as Indonesia’s Bank Central Asia are doing so as well.
Still, Henoch is optimistic that Bank BTPN can attract customers.
“I do believe every app [has] different purposes and different preferences by its customers,” he said. Regarding Jenius, he said, “We are focusing on the banking service to the customers who need it for their specific financial needs.”