Big banks are now adapting to the current digital trends.
Indonesian banks are realising that disruption in retail banking is happening and that they have no option but to embrace the current digital innovations, DBS Equity Research reports. It reveals that Bank Central Asia (BBCA) and Bank Mandiri have the best chance to ride this momentum on the back of their scalability, customer base, and product readiness.
Bank Mandiri also has plenty of opportunity with its huge micro-banking customer base. However, technology adoption by the middle-class and below is relatively slower, and thus collaboration with the branchless banking programme seems more feasible.
According to DBS Equity Research, here are the three trends in Indonesia that support the shift towards digital banking:
First, the number of internet users is growing very strongly. Indonesia has a lot to offer the digital economy player: it has the biggest number of internet users and the fastest growth among ASEAN countries. This opens up opportunities to ecommerce, online travel, online rides, and online media. All of these industries need a supporting digital payment system.
Second is the young population which is very adept at technology and actively interacts through digital media. These demographic and behavioural changes can be considered the most influential of all. The young consuming middle-class in Indonesia adapts very well to technological advancements and the number in this segment is growing very rapidly. This segment should be receptive towards the digital banking or even fintech products.
The last one is supporting regulatory framework to increase interoperability and interconnectivity between transaction channels. This can accelerate the adoption and development of electronic payments. The new BI regulation regarding the creation of National Payment Gateway (NPG) is expected to accelerate electronic payment adoption in Indonesia.
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