At the forefront of Indonesia’s digital banking revolution | digital, innovation | FinanceAsia

Combining mobile and internet usage to meet Indonesia’s increasing appetite for financial services is leading to a wave of new opportunities for those institutions which are quick to react and able to be innovative in creating solutions to meet the evolving needs of clients.

“Digital technology will continue to transform the banking landscape in Indonesia,” said Dini Isnarti, senior vice president, transaction banking wholesale group at PT Bank Mandiri. “As people adopt internet and mobile banking, digital channels are crucial in making customers ‘sticky’ and generating growth for financial institutions like us.”

This can be seen from the transaction volume executed through KOPRA, the bank’s wholesale platform. Marking a significant leap from its traditional banking channels, Bank Mandiri saw 326 million wholesale transactions as of June 2022, worth Rp8,053 trillion ($518 billion).

At the same time, the growth in tech and e-commerce players is pushing banks in Indonesia to create wider ecosystems to reach more of the value chain and encompass all stakeholders.

Bank Mandiri is looking to make a greater mark, too. “Going forward, we plan to develop a mobile apps version of KOPRA, so that it may offer more flexibility in executing transactions anytime and anywhere,” added Isnarti.

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Catering to changing client needs

The shift in behaviour towards digitalisation due to Covid-19 has accelerated the development of digital solutions more widely across banking everywhere.

This is particularly notable in Indonesia. According to a Bank Indonesia statement in 2021, digital banking transactions increased 46%, or Rp40,000 trillion, compared with the previous year.

In addition, the Financial Services Authority (Otoritas Jasa Keuangan, or OJK) has responded to the trend by issuing its Blueprint for Digital Banking Transformation, as stated in the Indonesian Banking Development Plan 2020-2025.

Bank Mandiri has long been at the forefront of this market trend. It started its digital journey at the beginning of 2008, when it launched its cash management system. Then, in 2011, it introduced mobile banking. In the last year, it launched what it calls its digital “super platform”, KOPRA by Mandiri.

“We offer a single access capability that allows customers to transact many business activities through KOPRA seamlessly,” explained Isnarti.

These capabilities include, for example, online onboarding for customers’ current account opening, supplier registration in the ecosystem, consolidated financial dashboards and virtual assistants.

In addition, KOPRA also allows customers to conduct transactions in many FX currencies with Bank Mandiri’s special rate, and to track telegraphic transfer or swift payments via remittance tracking.

“KOPRA is designed to provide comprehensive, end-to-end solutions for wholesale customers, from principal to end buyer,” added Isnarti. More specifically, it is equipped with features such as value chain financing, trade financing and guarantees which fit with the needs of the ecosystem.

Driving a digital future

The evidence of KOPRA’s success can be seen from the growth in wholesale digital transactions at the bank over the past year. By June 2022, for instance, the average monthly numbers and volume of transactions via KOPRA had increased by 37% and 27%, respectively, since its launch in October 2021.

“Digitalisation is the future generator of income, both interest and fee based,” said Isnarti. Using June 2022 as the benchmark, fee-based income from KOPRA reached Rp1 trillion, up by 13% year-on-year.

Digitalisation is also helping the bank acquire new customers through its captive value chain. “We can also acquire our anchor clients’ suppliers and distributors,” she added.

In addition, Bank Mandiri’s levels of efficiency have improved meaningfully over the past few years. “We were able to lower the cost-to-income ratio in June 2022 to almost 35%, and digitalisation stands at the centre of this result,” explained Isnarti.

Among the bank’s next steps will be the expansion of KOPRA’s features to its overseas branch such as Singapore, Shanghai, Hong Kong and Dili.


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