MICROCAPITAL BRIEF: Laku Pandai Branchless Banking to Launch in Indonesia via Bank Central Asia, Bank Mandiri, Bank Rakyat Indonesia and Bank Tabungan Pensiunan Nasional

Four Indonesian financial institutions, Bank Central Asia (BCA), Bank Mandiri, Bank Rakyat Indonesia (BRI) and Bank Tabungan Pensiunan Nasional (BTPN), are collaborating with Otoritas Jasa Keuangan (OJK), an arm of the Indonesian government that regulates financial institutions, to launch a branchless banking program known as Laku Pandai. The program is geared toward increasing financial inclusion and will be operated via mobile phones and other technologies. BCA also will offer “Laku” e-money cards at a price of IDR 2,000 (USD 0.20) [1]. Over 100,000 agents, both individuals and organizations, are expected to participate in facilitating branchless banking transactions for the four banks by the end of the year. Other banks are expected to join the program pending approval from OJK.

Muliaman Hadad, Chairman of OJK, was quoted as saying, “The Laku Pandai program will provide simple and easy-to-understand bank and financial-institution services, because we know that so many Indonesians don’t have access to banks, which have a limited number of branches and require several official documents from their customers” [1]. The program covers savings services, loans and other services – for example, microinsurance [1].

BCA reported total assets of IDR 552 trillion (USD 57.2 billion) in 2014. Bank Mandiri has total assets of IDR 733 trillion (USD 56.7 billion) and is backed by the government of Indonesia. BRI is focused on micro-, small and medium-sized enterprises and has total assets of IDR 596 trillion (USD 50.4 billion). In 2014, BTPN reported total assets of USD 5.5 billion; a microloan portfolio of USD 822 million, representing approximately 21 percent of the bank’s total loan portfolio; return on assets of 3.58 percent; return on equity of 18.40 percent.

By Jeff Pierce, Research Associate

About Bank Central Asia (BCA)

Bank Central Asia is an Indonesian bank that was established in 1957. In 1998, the Indonesian Bank Restructuring Agency, a government entity, took control of the bank in response to a downturn in the Asian economy. In 2000, after the bank recovered, it launched an IPO. In 2014, BCA reported total assets of IDR 552 trillion (USD 43.0 billion), a gross loan portfolio of IDR 346 trillion (USD 26.9 billion), return on assets of 3.9 percent and return on equity of 25.5 percent.

About Bank Mandiri

Bank Mandiri was formed in 1998 as part of a restructuring of the financial system by the government of Indonesia. In 1999, four state-owned banks – Bank Bumi Daya, Bank Dagang Negara, Bank Exim and Bapindo – were amalgamated into Bank Mandiri. Bank Mandiri provides financial services to private and state-owned businesses as well as microentrepreneurs and other individuals. As of December 31, 2013, Bank Mandiri reported total assets of IDR 733 trillion (USD 57.1 billion), return on assets (ROA) of 3.54 percent, return on equity (ROE) of 22.23 percent and 2,050 domestic branches along with 5 branches overseas.

About Bank Rakyat Indonesia (BRI)

Bank Rakyat Indonesia (BRI) was established in 1895 and provides saving and lending services to a range of customers, with priority given to micro-, small and medium-sized enterprises (MSMEs). As of 2014, BRI reported 6.7 million microloan clients in Indonesia. As of the same year, BRI reported total assets IDR 596 trillion (USD 50.4 billion), a gross loan portfolio of IDR 432 trillion (USD 36.6 billion) and IDR 470 trillion (USD 39.8 billion) in deposits.

About Bank Tabungan Pensiunan Nasional (BTPN)

Bank Tabungan Pensiunan Nasional (BTPN) was established in 1958 in Indonesia under the name Bank Pegawai Pensiunan Militer (BAPEMIL) to accept deposits and provide loans to its members, which consisted of pensioners, civil servants and military personnel. BTPN obtained its commercial banking license in 1993 and started serving micro- and small enterprises (MSEs) in 2008. In May 2013, Sumitomo Mitsui Banking Corporation (SMBC) purchased a 40-percent stake in BTPN for USD 1.5 billion. In 2014, BTPN reported total assets of USD 5.5 billion; a microloan portfolio of USD 822 million, representing approximately 21 percent of the bank’s total loan portfolio; return on assets of 3.58 percent; return on equity of 18.40 percent.

About Otoritas Jasa Keuangan (OJK)

Otoritas Jasa Keuangan is a government institution in Indonesia that is charged with the regulation of financial services. It shares these duties with Bank Indonesia, the nation’s central bank.

Sources and Additional Resources:

[1] The Jakarta Post News: “Four major banks launch branchless banking program,” Amianti, Grace, http://www.thejakartapost.com/news/2015/03/27/four-major-banks-launch-branchless-banking-program.html

MicroCapital Universe Profile: Bank Central Asia (BCA)

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+Central+Asia+%28BCA%29

MicroCapital Universe Profile: Bank Mandiri

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+Mandiri

MicroCapital Universe Profile: Bank Rakyat Indonesia (BRI)

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+Rakyat+Indonesia

MicroCapital Universe Profile: Bank Tabungan Pensiunan Nasional (BTPN)

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+Tabungan+Pensiunan+Nasional+%28BTPN%29

MicroCapital Universe Profile: Otoritas Jasa Keuangan (OJK)

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Otoritas+Jasa+Keuangan+%28OJK%29

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