When Mandiri faces the “Banking Disruption Era”
Mandiri, established in 1999 by a merger of four troubled Indonesian lenders hit by the Asian financial crisis, was one of the largest beneficiaries. As Indonesia’s economy recovered in the subsequent years, it rapidly expanded its corporate loan business. But loan growth has slowed down to single digits in recent years.
Competition and falling interest rates, driven by the central bank’s two policy rate cuts in 2017, have already begun eating into Mandiri’s profits. Its net interest margin — the difference between what banks earn on loans and what they pay for deposits — fell 0.57 percentage points to 5.87%, the lowest level in four years. In fact, Mandiri’s interest income was up only 0.6% last year; the jump in profit was mostly due to a large reduction in loan provisioning costs.
Here is the data of Market Capitalization between Mandiri compare with some of southeast Asia’s largest banks in the last 2017.
Bank Disruption
In 2017, banks are not the only competitors for Mandiri, a new wave of financial technologies is transforming the finacial industry.
In China, emerging of Ant Financial claim as world’s most valuable unicorn, i.e. Alipay, has own the Market cap USD 150 Billion (Rp.2,250 T) and got 450 Million active users within 4 years since 2014. And we can compare it with highest Bank in Indonesia on this table below:
Indonesia is regarded as one of Asia’s most attractive markets for digital payments, with roughly 91% of its 264 million strong population owning a mobile phone, but a heavier than average reliance on cash. Morgan Stanley estimated last year that only 2.1% of non-cash transactions in 2017 used e-money, but the share is forecast to rise to 24% by 2027.
Nowadays Financial Technology in Indonesia which disturbing Financial Institution/ Banking disturb Go-pay and OVO pay. Indonesia’s digital payments grew 280% in value last year, while transaction volume increased 210%. Both Go-Jek’s Go-Pay and Ovo have been able to leverage networks of consumer facing businesses to enlarge their user base. In 2018, Go-pay reach the payment transaction in amount of US$6,3 billions, which is very funtastic.
Go-Pay is used for transactions in the various services Go-Jek offers on its platform, from ride hailing and ordering food to calling massage therapists. The payment service expanded to offline stores last year. Ride transactions also are important to Ovo, which is partly owned by Singapore-based ride-hailing operator Grab. In addition, Ovo has a partnership with Tokopedia, Indonesia’s leading e-commerce company. Go-Pay and Ovo also spent heavily on promotions including cash-back offers to win market share, letting them dominate Indonesia’s 47 trillion rupiah e-payment market between them. Here are the data shown increasing digital payment in Indonesia:
Bank Transformation
To make Mandiri still exist when faces the Financial Industry Revolution, Mandiri planned and created some strategies;
- Revolution for the banking transaction and Lending process
Mandiri, Himbara Bank, Pertamina and Telkom creates the product which can transaction by using QR code like the competitors, called “Link Aja”, would be launch in March 2019. In order to fasting the lending process, Mandiri joined with Ping An, one of the unicorn in China, that can count, predict and decision of the loan approval by scanning the profile of customers using the technology.
- Creates Corporate Venture Capital by Mandiri Capital Indonesia
Mandiri Capital Indonesia, part of subsidiaries Bank Mandiri, facilitating enterprise partnerships between portfolio startup in assist startups to be the next global players.
- Shifting a new type of branch concept
Replaces tellers with machines and trains the spare personnel to become sales people who pitch products to new customers, calls “fox hunters”, also creates the Hype Branch and Pop up Branch.
Hype Branch Concept
Pop-up Branch Concept
For the conclusion, Banking and or Financial Institution in Indonesia must be prepared for the Banking Revolution. Have to try more innovative, creative and also futuristic facing the challenges ahead because Indonesia has to be an attractive country by a foreign investor which offers huge opportunities.
References:
https://asia.nikkei.com
https://www.reuters.com
https://www.cnbcindonesia.com/fintech
https://www.thejakartapost.com
About Post Author
Wow nice article mba. I couldn’t agree more with the idea of shifting a new type of branch concept by replacing tellers with machines and trains the spare personnel to become sales people who pitch products to new customers, calls “fox hunters”, also creates the Hype Branch and Pop up Branch.