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OCBC NISP transforms its branch into a financial fitness gym

This is the bank’s way to instill the “FinanciallyFit first, CrazyRich later” mindset to the younger generation.

Indonesia’s young generation’s average financial health score is only 37.72 out of 100—far below the score of other countries, such as Singapore with 61, the results of the OCBC NISP research in 2021. This indicates that the Indonesian youth are still lacking in terms of financial health and even financial literacy. OCBC NISP then came up with an idea called Financial Fitness Gym (FFGym).

OCBC NISP designed its branch office in Mall Ciputra World, Surabaya, called Nyala OCBC NISP, like a fitness centre. Launched in December 2021, FFGym is intended to train and strengthen the financial muscles of the younger generation. The branch is where everyone can take personal financial management classes and learn about business management available in the ground area; conduct financial fitness check-ups and financial consultations with financial coaches in the consultation area.

"The function of the branch is no longer just focused on transactions, but also as a place to be able to provide the right understanding of financial management so that customers or visitors can improve their financial understanding (knowledge), improve financial management habits (behaviour), and align the mindset with the right attitude (attitude) so that they can make financial decisions,” said Senior Executive Vice President and Head of Retail Loan Business, OCBC NISP, Heriwan Gazali, in an exclusive interview with Asian Banking & Finance.

A peek inside FFGym

FFGym houses contemporary hidden gems, starting from cuan tunnel with a lucky cat mascot design which is synonymous with luck and money, then the Hustle Hall that features financial activities with technological interactions presented on Samsung Smart Signage and Samsung Flip from Samsung Electronics Indonesia, so that the results of the financial gym can be shared with the visitors' gadgets with guaranteed security.

It also provides a Lucky Cat vending machine, merchandise area, and Nyala Coffee, a new menu from First Crack Coffee. So far OCBC NISP has launched it in Surabaya and, soon, in Jakarta. Anyone is welcome without having to be a customer of the bank.

Heriwan said that the FFGym was created to disrupt the general public's view of the rigid atmosphere in banks and to provide an approach to providing an experiential learning and collaborative space so that customers and visitors have the opportunity to explore their financial knowledge in a safe and comfortable environment.

“One of the distinguishing values ​​is the existence of financial coaches and trainers who help to support financial aspirations, as well as affordable financial instruments, namely Save 20 (IDR 20,000 Mutual Funds), which can motivate young Indonesians to learn to practice the concept of wealth management," said Heriwan, adding that the performance of OCBC NISP's wealth management products in 2021 for mutual funds, bancassurance, and securities products, which overall experienced a 15% increase in income compared to 2020.

"Fee-based income from the wealth management business also made a positive contribution, amounting to 25%, which came from mutual fund and bancassurance sales transactions, as well as profits from selling securities to Bank OCBC NISP's total fee-based income," he added.

Wealth management, according to Heriwan, is the most important information for young people to know today. "Their mindset must be changed to FinanciallyFit first and then CrazyRich," said Heriwan.

Based on research

With indicators measured through a survey of 1,027 respondents aged 25 to 35 from Jakarta, Medan, and Surabaya, one of the results of OCBC NISP's research in the Financial Fitness Index stated that there is still an inappropriate mindset regarding finances and the definition of "rich". Those who consider wealth as only seen from material possessions, like luxury houses, cars, branded goods, etc., have a lower Financial Fitness score of 36.98. Meanwhile, those who define wealth as referring to investment products, such as mutual funds, stocks, bonds, etc., have a higher Financial Fitness score of 42.64 and can be called healthier.

The research also states that the Indonesian people, in general, still have not invested and have no passive income, where the index scores are still at nine and seven out of a maximum score of 100. Apparently, this also applies to people with higher incomes, which means there is a gap between their attitudes and behaviour.

Indonesians with incomes above $2,700 (IDR 40m) have also not maximised their investment behaviour (score 25.6 out of a total of 100) and passive income (score 18 out of a total of 100). In fact, around 30% of people who have an income of $1,000 (IDR 15m) to $2,700 (IDR 40m) still often borrow money; and more than 50% pay credit card bills at the minimum.

Apart from investment behaviour not being maximised, it is also not appropriate, OCBC NISP observed. Heriwan highlighted the current condition wherein many are stuck with investment offers whose legality is not yet clear and offers a quick way to get wealth. 

“Young people are easily tempted by something effortless but with instant results. Not completely wrong, but we want to remind you that high risk—high return applies and everything has consequences. So we build financial literacy for them, such as how to allocate it," said Heriwan.

Staying relevant

FFGym is amongst the bank’s many efforts to remain relevant, expressed Heriwan. He sees that the function of banking is not only to provide financial solutions but also to add value for its customers through innovation and comprehensive services. For Heriwan, the financial industry will be required to be more dynamic, in line with changes in the changing consumer behaviour due to the impact of the pandemic.

OCBC NISP's success in turning challenges into opportunities presented by the pandemic itself can be seen in its net profit of $176.8m (IDR 2.5t), up 18% (growth in IDR amount is 20%) year-on-year (YoY) from $149.6m (IDR 2.1t) in 2020. This increase comes after the bank’s net interest income grew by 6% (growth in IDR amount is 7%) YoY to $536.3m (IDR 7.6t) until the end of 2021.

Third-Party Funds also increased 4% (growth in IDR amount is 6%) YoY from $11.3b (IDR 159t) in 2020 to $11.8b (IDR 168t) in 2021, and loan disbursement rose 4% (growth in IDR amount is 5%) YoY, up from $8.2b (IDR 114.9t) in 2020 to $8.5b (IDR 120.8t) in 2021. The bank also recorded an increase in the distribution of bank mortgages throughout 2021, which recorded a growth of 21% (growth in IDR amount is 23%) YoY.

Another initiative is the development of a digital service called One Mobile with the capability to grow money and perform daily transactions. The number of transactions made by customers through One Mobile throughout 2021 increased by 17%, transaction value increased by 18% (growth in IDR amount is 20%), and the number of users increased by 19% compared to 2020.

The same upward trend is seen with OCBC NISP’s digital service for corporate clients called the Velocity. The positive response from corporate customers is reflected in the increase in usage throughout 2021, where the value of transactions through velocity@ocbcnisp grew 61% (growth in IDR amount is 64%), whilst the number of transaction frequencies and users each grew by 20% and 11% compared to 2020.

In strengthening the business model, Heriwan sees that it is not enough for banks to rely on interest income, but needs to be supported by non-interest income sources, as well. Therefore, in the future, OCBC NISP will continue to strengthen the bank's wealth management business, which at the same time is also a value-added service not only for individual customers but also for corporations.

Note:

2021: USD1 = IDR14,252.50

2020: USD1 = IDR14,050.00

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