BRI employs AI ‘brain’ to merge its digital and physical presence

BRIBrain has helped the bank reduce loan application times from 2 weeks to 2 minutes

After brilliantly closing 2021 with a $2.2b (IDR 32.22t) net profit, translating to a 75.53% year-on-year growth, Bank Rakyat Indonesia (BRI) can say that it has formulated an ideal strategy to remain prominent in the midst of challenges and trends in the banking world that continues to develop. The answer is in its artificial intelligence (AI) system called BRIBrain.

BRIBrain was developed to store, process, and consolidate all information from various sources. It is the brain behind the bank’s ‘phygital’ strategy.

“Combining physical and digital presence is BRI's answer to meet the expectations of the public, some of whom prefer to transact digitally and others feel more comfortable and safe to meet face-to-face with bank officers,” said BRI's Director of Digital and Information Technology, Indra Utoyo, in an exclusive interview with Asian Banking & Finance.

Big data for a hybrid bank

To maintain performance and modernise its services, BRI allocates 3% of revenue for technology investment or 5% to 7% of costs. 

"Currently we are entering an era where data analytics, software, design, cyber security, and user interface/user experience play very important roles," Indra said. "We, as an old bank, need technology that is truly a game-changer in this competition, such as artificial intelligence, blockchain, and cloud.”

This is the reason why the bank integrated BRIBrain particularly in four of the bank’s processes that boost both of the bank’s physical and digital capabilities.

First is in the BRILink Score, the scoring system for the assessment of the BRILink Agents. Through this system, the 504,000 BRILink Agents throughout Indonesia are encouraged to help in improving the bank’s O2O or Online-to-Offline services, especially for people in the regions, through financial inclusion and literacy.

BRILink Agents’ transaction volumes reached $76.74b (IDR 1,143.81t) in 2021. They were also able to raise low-cost funds (CASA) of $1.3b (IDR 19.38t) and fee-based income (FBI) of $89.9m (IDR 1.34t).

Second, BRIBrain makes the credit scoring process for loans faster and more accurate. The machine learning approach makes the creditworthiness of prospective debtors faster, with minimal risk, so that approval and disbursement of loans can be done instantly, and the risk of bad credit can be minimised.

“In terms of loan financing, where, previously, the process could take up to two weeks, decreased to two days, and finally only two minutes for approval," said Indra.

The journey of “two weeks to two minutes” itself began in 2018 when the bank started to digitalise and automate. But before 2018, banks operated on a very paper-based, manual, and complex basis so that the average financing settlement took up to two weeks.

Third, BRIBrain helps with the bank’s Customer Profiling Score. It maps customer profiles appropriately so that the communication approach with customers is fast and accurate​. BRI continues to improve their Customer Relationship Management and Electronic Direct Mails, as well as its e-channels, such as Automated Teller Machines (ATMs), with units currently at 220,000 e-channels and the number of its outlet reach 9,200 outlets.

Finally, BRIBrain adds a system to the Fraud Score. It enables BRI to quickly spot and address banking crimes, such as fraud, and realise anomalies and crimes in transactions quickly.

“The presence of BRIBrain will facilitate business decision making with a measurable level of risk and provide wider information input in a prudent, secure, and reliable business management process. In the end, it can increase customer and stakeholder trust in BRI,” Indra said.

Other efforts

Another way of shifting people's behaviour to transact digitally is turning bank officers into advisors. Currently, BRI has 37,000 experienced financial advisors, who follow the journey of the customers to give them a more personalised experience. 

BRI has also entered into digital ecosystems, such as Agri Tech, Health Tech, and Food Tech to facilitate the value chain within the ecosystem as embedded finance. Indra explained that BRI entered open banking with very large transactions, reaching $12.34b (IDR 184t). 

For investment in human resources, Indra said that BRI allocates 5% of the cost for training. "Especially when the development and competition in the financial industry are currently very fast, BRI also needs talents who are adaptive, agile, customer-centric."

Throughout BRI's digital transformation, Indra observed that banking regulations in Indonesia are very supportive. He cited as an example the payment system blueprint through the Bank Indonesia (BI) for 2025. “This encourages the digital payment system to continue to improve financial inclusion, so that the movement of money takes place faster and more efficiently, such as by using an e-wallet, Quick Response Code Indonesian Standard, and fast payment," said Indra.

The Financial Services Authority (OJK), with its OJK Regulations (POJK) No. 12 and 13, also expressly supports the licensing of new products from what was originally rule-based, now changing to principal-based. "In it, we see that the provision of services has also emerged, which is called a digital bank so that we no longer add KPIs for additional branch offices," said Indra.

However, Indra also said that there are things that need to be followed up immediately from a regulatory perspective, namely the urgency for the immediate enactment of a law on personal data protection. "Otherwise, in doing transactions people will be completely uncomfortable and trusting," he added. 

As we know, the foundation of this digital economy is telecommunications. Telco, itself, is under the Ministry of Communication and Information, whilst the payment and financial systems are regulated by BI and the Ministry of Finance. So, according to Indra, there is no regulation regarding fraud. “There needs to be cross-sector regulation, so we can improve this digital economy even faster and overcome existing weak points," concluded Indra.