To keep up with the rapid pace of digitalization in Indonesia, the Financial Services Authority (OJK) recently launched its blueprint for digital banking.
McKinsey’s Personal Financial Services survey revealed that around 8 in 10 Indonesians now use digital banking, up from around 6 in 10 in 2017. Furthermore, 8 in 10 also expressed that they will probably use digital banking and online payments for transactions, even post-COVID.
In response to the growing use of and demand for digital banking services, OJK unveiled the Blueprint for Digital Banking Transformation as a point of reference to help banks speed up digital transformation.
According to OJK, the plan was created after taking into account a variety of factors, including existing and future banking research, bank digitization conditions, international standards, banking industry best practices, stakeholder input, and coordination with relevant authorities’ regulations and policies.
The blueprint focuses on five elements of banking digitalization development: data, information technology, risk management, collaboration and digital ecosystems, and institutional arrangements.
“The launch of this blueprint is a more concrete illustration of OJK’s various initiatives and commitments in promoting the acceleration of digital transformation in banking,” said OJK Banking Supervisory Chief Executive Heru Kristiyana at the blueprint’s launch in Jakarta yesterday.
Foreign banks are taking notice, too. Last September, Singapore-based UOB said it would invest up to $500 million in Southeast Asia over the next five years to expand its digital services across the region. Since 2019, UOB has invested $200 million in Thailand and Indonesia to develop digital financial solutions.
Aside from traditional banks, digital banking platforms like Mambu are also extremely keen on having a slice of the digital banking pie. Mambu is assisting Indonesia’s PT Bank INA Perdana Tbk in underpinning its digital transformation path as it introduces new digital banking services to the market.
Over the last year, the Indonesian government has also shown its support of digital banks. In August, Bank Indonesia debuted a new set of standards for digital-only banks, becoming the fourth country in Southeast Asia after Singapore, Malaysia, and the Philippines.
As such, digital banks have grown steadily, with Bank Jago leading the way. Early this month, Ribbit Capital, a US-based venture capital firm, has purchased a minority stake in Bank Jago to help the bank continue to expand digital banking products for Indonesians, particularly the country’s unbanked and underbanked.