Digital Banking: Banking Landscape Of Indonesia In 2023
Fintech is reshaping Indonesia’s banking. Big banks go digital to reach 125M underbanked citizens—cutting costs, closing branches, and riding fintech’s wave. But can they balance growth, security, and jobs? Discover the “sweet temptation” of digital banking.
The fintech industry in Indonesia creates an evolution towards how traditional bank works. Majorly triggered by the pandemic, big banks slowly shifted their business model towards digitalization.
No more big amounts of capital to set up a new branch is a sweet temptation that is hard to resist, especially in Indonesia, where rural areas cost a lot of capital to set up a branch. At the same time, the estimated revenue cannot support at least operational expenditure.
Fintech technology allows banks to reach out to rural areas without an obligation to set up a branch that will cost much capital expenditure. And also, some banks have already trimmed down their "unproductive" branch and focused more on registered agents that work as mini-ATMs for their banks, and some even allowed to help customers to open their bank accounts.
Sweet Temptation of Digital Banking in Indonesia
Looking at how Fintech "teaches" banks in Indonesia how to reach the underbanked population in Indonesia, which is more than 125 million people (more than 50%) with "small" investments.
Banks are changing their business models by replicating the fintech companies' method. One of the biggest state-owned banks launched their Digital Banking Program in 2019. Data from…
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