Interview: Batara Sianturi
To what extent can mobile banking help increase banking penetration generally?
BATARA SIANTURI: There is still a lot to do in terms of financial education, financial literacy and financial inclusion. But we are quite optimistic, because the velocity of change is increasing, especially when it comes to the use of technology. The good news is that while banking penetration is low, mobile phone penetration is high: there are more mobile phones than people in Indonesia. This is a good start. The more effectively we bring banking to mobile, the more we will find the convergence. People are more and more familiar with mobile banking and buying more and more through smartphones, which is a real door-opener to mobile banking. Everybody is working on mobile banking and we are confident that this will be one of the growth drivers for the sector in the coming years.
How can credit card use be boosted?
SIANTURI: The key to credit card business is to increase the acceptance of credit cards, whether that is through businesses or merchants. We would like to see more shops and stores accepting credit cards as a mode of payment. Once they start doing so, that will start a shift within the population towards a cashless society. There is now less of a need for education on how to use a credit card, but it remains important to educate on how to use it wisely. There are some good regulations on limiting credit, which is positive in curtailing overheating in retail spending. As the debit card industry grows, thereby connecting the bank’s e-commerce and retail customers, the speed of change will only increase.
The growth of e-commerce opens up new opportunities. Customers want convenience and want to shop online. E-commerce requires flexibility on payments, and the bank wants to ensure that online retailers are not another group of merchants that is not using brick and mortar. As e-commerce merchants facilitate goods purchases, the first step for the banks is to ensure that there is maximum convenience, so that you can always use cards when making purchases online. The growth of e-commerce is a great opportunity for cashless payment solutions like credit cards and debit cards, since online payments bypass the need for card swipe machines, which remains one of the downsides to the increase in card use.
What are the current challenges for an international bank operating in Indonesia?
SIANTURI: There are always challenges. We need to ensure that we focus on where we can add value, like working with multinationals, since they have similar geographical profiles. We also have local corporate clients and financial institutions, which is where we use our strong value to provide connectivity and find opportunities for them further afield. Some challenges include the need to find creative solutions to meet our targets for loans to small and medium-sized enterprises and mid-market enterprises, which have been set by the regulators to encourage increased participation. This is a challenge for global banks, which have a limited network of branches, unlike domestic banks, which will often have several thousand branches. Local banks have their own mission, just as regional banks and global banks do. We feel that everything is complementary: you need all three, because they each have specific roles. A very specific example for global banks is the participation in global bonds. The focus is on where we can add value and how using global banks can add value for multinationals. Our Indonesian team meets investors abroad and creates road shows, which is one example of how global banks can attract investment to Indonesia. That is the way we see our role as a global bank in Indonesia. We want to contribute to boosting growth and surpassing the current rate of 4.9% GDP growth, as we believe the country has potential for more.
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