How is Indonesia’s banking sector adapting to the digital economy?
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Sat, 15 Feb. 2020
CONTRIBUTING PARTNERSOxford Business Group
In an interview with Global Platform, Batara Sianturi, CEO of Citi Indonesia, discusses how Indonesia’s banking sector is adapting to the digital economy and the proliferation of financial technology (fintech). The country’s banks are poised to build off of strong performance in the next, technology-driven stage. Small and medium-sized enterprises are set to play a central role in this next phase, propelled by a supportive entrepreneurial ecosystem.
Watch the interview here.
Indonesia continues to be an attractive destination for foreign direct investment. Growth has been quite significant, and we see that this trend will continue in the future.
The digital economy
We are very excited about the digital economy in Indonesia. Indonesia’s digital economy will grow to $133bn by 2025. That is huge growth and the fastest in ASEAN.
Banking and fintech
So within this context, we are very excited about all the opportunities built-in institutional banking or in consumer banking fintech, e-commerce, and all the digital players. We used to compete against each other in the banking sector. Now we are moving to collaboration. We found that it is now time to collaborate with all these new players, that you need to create solutions. There are solutions that need to be co-created by the banking sector and the fintech sector. This co-creation structure between the banks and fintechs will be the role model going forward.
The Indonesian banking sector is in quite a good shape. If you see the capital ratio, the liquidity ratio, the credit growth and the growth of deposits in the past few years, you know they are quite robust. The interest margin for Indonesia is close to 5%, a very attractive market for investors.
The entrepreneurial ecosystem
The entrepreneurial spirit of Indonesia is fantastic, and we really have high bets and high hopes that the SME sector will be the big driver for the Indonesian economy going forward. It could be lending directly to them or we can lend to, say, e-commerce, the fintech players that facilitate the SMEs, which will further accelerate the growth of the SME sector. Indonesia will between 2030 and 2040 hit what we call the “demographic sweet spot”, which is presenting an opportunity that by 2045, hopefully, if we have the right growth environment, the right job environment, that Indonesia will join the ranks of high-income countries.
To view the original article from Oxford Business Group, please click the link below.