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This man is transforming Indonesia’s oldest and largest lender into a digital bank

Written by Cindy Silviana Published on   4 mins read

There is no other option for the largest state-lender except to go digital and collaborate with fintech players.

When Indra Utoyo was appointed as the digital and IT director at Bank Rakyat Indonesia (BRI) in 2017, his vision was clear and firm. He would transform Indonesia’s oldest and largest state lender in terms of assets into a digital bank.

Founded in 1895, BRI’s total assets now stand at IDR 1,305.66 trillion or USD 93.52 billion, according to the bank’s 2019 Q3 financial results. The bank focuses on micro, small, and medium-sized enterprises (MSMEs) across Indonesia.

BRI is seen as one of the largest microfinance institutions in the world, having around 9,600 outlets in Indonesia. The emergence of fintech platforms, however, has adversely impacted some banks’ businesses, and BRI is no exception. Moreover, an estimated 66% of Indonesia’s more than 260 million population remains fully unbanked.

Utoyo realized that the gap between banks and some ‘underserved’ sectors had to be addressed. On one hand, the banking industry is very rigid and hence it is difficult to disburse loans to risky segments that don’t have collateral. On the other hand, fintech players have zeroed in on these segments, providing loans faster and more efficiently than banks.

GoPay, OVO, and other e-wallet providers have become very popular with the emergence of digital players such as Gojek, Grab, and others. People have moved their money from banks to e-wallets, threatening banks’ liquidity and resources to disburse loans to expand their businesses.

“There is no other option for BRI, except for going digital. We know there is a gap between banks and some sectors, and therefore we need fintechs to collaborate with so we can reach more people in the ultra-micro business segments,” Utoyo told KrASIA in a recent interview.

As part of its strategy to go digital, BRI is targeting two new segments that have never been tapped before: ultra-micro businesses and the millennials. He believes that these segments will step up their economic level someday, and the bank doesn’t want to lose out on these markets. Over 57 million are formal MSMEs in Indonesia, which contribute 60% to the overall GDP of Indonesia and account for 99% of all businesses. The millennial generation is poised to become the dominant generation making up Indonesia’s demography.

BRI launched two lending platforms named ‘Pinang’ and ‘Ceria’ this year. Both platforms focus on consumer lending and compete directly with other fintech lending players. Pinang targets blue collars who use BRI as their payroll bank. Meanwhile, Ceria focuses on millennials. These platforms can accommodate a maximum loan of IDR 20 million (USD 1,428) with only 10-minute submissions.

“In this 4.0 industry era, especially for banks, revenues no longer come from traditional loans, where the amounts are big and need to be repaid in the long term. We need to generate new revenue growth with digital partners, although the size is smaller and shorter [in term],” Utoyo explained.

BRI has managed to balance and maintain business liquidity due to its investment in e-wallet provider LinkAja, ensuring that the transactions remain in its ecosystem. It, along with other state lenders, and state-owned enterprises (SOEs) have invested in LinkAja, which has revolutionized the SOE e-wallet space. BRI has a 19.7% stake in LinkAja.

To bridge the gap between the banks and the ‘underserved sectors’, BRI has collaborated with 75 digital industry players, including fintech lending, over-the-air platform, and e-commerce players. The bank has 200 partners and also claims to be the first open API bank.

For fintech lending, BRI has co-operated with Investree, a series B fintech lending firm focusing on supply chain financing for MSMEs, since August 2019. Utoyo shared that financing through fintech has grown rapidly. After pledging around IDR 200 billion (USD 14.36 million) to Investree in 2019, it will distribute more loans to a maximum of IDR 2 trillion (USD 143.64 million) in the next round. This makes BRI the biggest institutional investor in the platform, followed by Credit Saison Japan and Bank Mandiri.

In September 2019, BRI also partnered with Indonesian unicorn and online travel agency Traveloka to launch a PayLater Card which functions like a credit card.

“This young generation doesn’t know about credit, but they know pay later, so they can purchase something using the pay later feature,” Utoyo explained.

Establishing BRI Ventures to ramp up revenues

Even though BRI has established two fintech platforms and collaborates with digital players, Utoyo knows these are not enough for the bank to maintain and accelerate its business growth in the digital era.

“The most challenging part is to change the mindset and behavior of people, which have been conventional in this big company,” he said.

With 17 years of experience in the biggest SOE telco operator Telkom Indonesia, Utoyo understood that in order to accelerate its business, the state lender needed to have a CVC similar to MDI Ventures, the corporate venture capital (CVC) arm of Telkom.

He acquired one of the state ventures and reformed it as a new division called BRI Ventures in July 2019. The management appointed Nicko Widjaja, the former CEO of MDI Ventures, to lead and manage a USD 250 million fund under BRI Ventures.

“We need to embrace many innovators from startups. By doing this, we can reach deeper into the ultra-micro and micro segments, so that this will grow our business too,” Utoyo explained.

In 2020, BRI is prepared to invest in 10 startups, including fintech in the agritech sector and others that can grow the bank’s business.

“In the future, BRI desires to reach and empower more ultra-micros and micros, with bigger transactions. We will further evolve into a digital company with our channel networks. We will be an integrated financial solution provider, but we also hope to be the bank of choice for partners, especially in the MSMEs segment,” Utoyo said.


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