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    11 views18 pages

    Digital Bank in Indonesia

    Uploaded by

    Hikmat Hayat

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    © All Rights Reserved
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    extreme THE GROUND WHERE WILL THE MONEY GO? LEARNING CUSTOMERS' THOUGHTS ON DIGITAL BANK He=8 J oae SCRETT ie KoNVENSIONAL ToP sucorsekuritas.com Author: Prima Wirayani E prima.wirayani@sucorsekuritas.com P +62 21 8067 3174 Edward Lowis E edward.lowis@sucorsekuritas.com P +62 21 8067 3177 WHERE WILL THE MONEY GO? LEARNING CUSTOMERS’ THOUGHTS ON DIGITAL BANK. | Sucor Sekuritas The year 2021 has been a hype for all things that are digital or digitalized. It is no wonder because the prolonged Covid-19 pandemic has shifted consumers behaviors: people now spend and enjoy more time at home while doing almost all their daily activities online. The new trend also brings changes to how companies run their businesses. Brick-and-mortar shops now have their digital sales channels, healthcare services can be obtained through telemedicine, and even financial transactions now go seamless through the tip of our fingers. This edition of EXTREME On-The-Ground report covers the wave of digital banks and, most importantly, how their users behave amid a sea of promotions offered by digital banks to lure users. Both inv Digital bank theme has dominated Indonesia's stock i oot market this year as their innovations are seen by love digital banks investors as the future of banking services. As a result, digital banks’ stocks soared higher than the Jakarta Composite Index (JCI) and the LQus so far this year. ‘tors and users. At the same time, more and more customers opt to use digital banking services during the pandemic. Bank indonesia (BI) latest data showed digital banking transactions jumped 46.72% year-on-year (yoy) to IDR 28,685.48 tn as of September ‘21. ‘Our survey in November - December '21 found that almost 92% of the respondents have used digital banking services in the forms of mobile and internet banking. This opens way for digital banks to acquire these tech-savvy customers. Neobank and Jago become Bask Neo Commerce's app (Neobank) and that of sen lini Jago are two most-used digital bank app by our favourite digital bank apps fespondents with 29.3% and 21.2% respondents, respectively, chose the apps Moreover, the customers actively use the apps with only 36.1% of them open their digital banks' apps just ‘once or twice a week. Respondents do transfer (82.5%) and payment (46.4%) transactions the most on the apps, followed by savings and time deposits. Digital banks’ customers Around two-third of our survey's respondents ‘ they would increase their income portion saved are sticky, but not loyal tothe digital bank accounts. As many as 24.1% of one brand respondents planned to increase the portion to 10%-15% of their monthly income, making a total of 156.6% respondents who were willing to increase the portion to up to 50% of their income. However, only 20.1% of respondents said they will not ‘open another digital bank account. Around 32% of the respondents said they will become a customer of another digital bank if the new bank offers higher interest rate. 10 JANUARI 2022 1 WHERE WILL THE MONEY GO? LEARNING CUSTOMERS’ THOUGHTS ON DIGITAL BANK. Solid foundation for Indonesia's digital banks 10 JANUARI 2022 | Sucor Sekuritas This survey proves that the mystifying surge in digital bank stocks are indeed build upon solid foundation with rapid growth in user base and stronger adoption. Several digital banks, including Neobank (BUY - TP IDR4,340), Jago (BUY - TP IDR22,400) and Seabank (Not listed) have already established themselves as dominant forces in digital banking of the future. With this trajectory, we are convinced that the digital banks will attain a sizeable market share as the industry progresses forward. Increasing in-app banking features and services as well as stronger integration with digital ecosystem will be the driving force to elevate further. WHERE WILL THE MONEY GO? LEARNING CUSTOMERS’ THOUGHTS ON DIGITAL BANK. | Sucor Sekuritas The magic word is “digitalization” The digitalization theme in the banking sector seems to become a dominant color in Indonesia's, stock market this year. Big as well small banks race to ramp up their digital services and tap into the lucrative market. Big banks acquire small banks to be their digital bank arm while the small ones, work to attract investments to strengthen their capital to compete in the landscape, As a result, any corporate action related to digital bank plans fuel the lenders! shares prices as investors pin high hopes on the future growth epee ‘Source: Internet 10 JANUARI 2022 3 WHERE WILL THE MONEY GO? LEARNING CUSTOMERS THOUGHTS ON DIGITAL BANK | Sucor Sekuritas ‘Small-cap banks have recorded multiple growth in their stocks prices so far this year, eclipsing increases recorded by the Indonesia Stock Exchange (IDX) main gauge, the Jakarta Composite Index (JC), and the LQus, which tracks the bourse’s blue-chip stocks. en eer nee ere Ora Barren) Bank Neo ‘Commerce ‘Bank Ganesha ‘Bank MNC Internasional JCI grew 10.65% ytd LQ4S lost 1.91% ytd Source: IDX, companies’ financial reports 10 JANUARI 2022 4 WHERE WILL THE MONEY GO? LEARNING CUSTOMERS’ THOUGHTS ON DIGITAL BANK. | Sucor Sekuritas But customers also love digital banks’ services. Indonesian customers’ familiarity with digital banking services provided by conventional banks paths way for seamless adoption of digital banks’ services. According to Bank Indonesia (Bi) latest data, digital banking transactions jumped 46.72% year-on-year (yoy) to IDR 28,685.48 tn as of September this year. The central bank expected the value to grow around 43% yoy to IDR 39,130 tn by the end of 2021. ‘There are three factors that support the growth, according to a central banker. They are: 1) the people's higher acceptance and preference toward digital transactions which in line with less outside activities during the pandemic; 2) bank and non-bank financial institutions’ efforts to improve their digital payment services; and 3) accelerated digital transformation during the pandemic, Estimated number of adult Indonesians with digital bank account (in %) Source: Fender com 10 JANUARI 2022 As conventional banks’ customers are getting comfortable with digital banking services, more Indonesians are expected to use digital banks’ services in the future. The result of a survey by independent comparison platform and information service Finder.com published on October 7, 2021 estimated that 25% adults in Indonesia or around 47.72 mn people have digital bank account in 2021. The figure is expected to increase to 31% next year and to 39% oF approximately 74:78 mn in 2026, The survey was conducted toward 41,654 respondents in 30 countries around the world. WHERE WILL THE MONEY GO? LEARNING CUSTOMERS’ THOUGHTS ON DIGITAL BANK | Sucor Sekuritas ‘One communication consultant living in South Tangerang said Bank Jago's (ARTO UW) account she ‘owns eases transactions on Gojek, especially GoPay, platform as it is already integrated in the latter's application. She also said digital banks' apps are easier to use compared to that of conventional banks. “Jago’s app runs very well so far,” she said. See ker ee ree aes neat [ viome rr a 90 'e@ oPuisa Mow Pay with Jago, no top ups 1553P to yournost tease > Bark Jago is supervised by OJK & LPS, so your ‘datas protected. Open an account Guickections) What makes it effortless © recvs rea ne z g@_Ealer money aiocaton with Pockets Separate money using Pochets fot food, ‘eanapent, and savings uncer one account, @ bes seting tood inmy area > GPO to open account & transfer No min. balance to open Jago. Froo monthly din fos ond bank rranefors ; 1B Sin up digitally within minutes (Open an account from your phone and wee ready to hep you get started anytime. By continua. you age tthe Term & Coneiions ond Privacy Potey Many benefits with Jago! Free flom top up and easy to manage expenses with mary pockets. Cick > Source: Sucor Sekuritas 10 JANUARI 2022 ‘6 WHERE WILL THE MONEY GO? LEARNING CUSTOMERS’ THOUGHTS ON DIGITAL BANK. | Sucor Sekuritas Meanwhile, another private employee living in Jakarta admitted that he initially opened an account at Bank Neo Commerce (BBYB U) out of curiosity. However, he is now hooked by the app's gamification that enables him to earn points and cash through referral system. The digital bank's high interest rate also lures him to deposit a portion of his money. Further, our recent survey also shows that digital banks are gaining popularity among banked people. From the survey result, we can see how people who live in big cities are more acceptable toward the digital banks! services, This is in line with several digital banks’ business strategies that eye people living in metropolitan cities as their low-hanging-fruit customers. Citizens in the big cities are perceived to be more tech savvy compared to those in other regions in Indonesia and are opened to new technology and apps. 10 JANUARI 2022 7 WHERE WILL THE MONEY GO? LEARNING CUSTOMERS’ THOUGHTS ON DIGITAL BANK | Sucor Sekuritas Digital banking preference We carried out a survey in November - December ’21 toward 402 respondents nationwide to learn about their acceptance and stickiness of such a new technology in banking services. Around 44.4% of the respondents are domiciled in DKI Jakarta, Banten, and West Java areas, which are metropolitan areas targeted by digital banks at the time. Sarees Sar tke nN D 2 wth tl respandets of 402 atone ‘Occupation Monthly income orem ne woraasmn Los lonseaorme 23% fongeasen Fak Frou lena ete 47% Yonseaoren Bl 3A% ‘onsasmn Ml 3% ‘onsese oe sa Cotsen aa pe — py 5 I 253% nengioned 3% TT 6% Sure Sacer Shuts: Srey tan on No Dee with otal sponds ef 2 nationwide All of our respondents are bankable and familiar with various banking services. They are opened to ‘owning more than one banking account as only 18.5% of them said they had only 1 account. Almost. 32% of the respondents have 2 bank accounts and even 12.4% said they own more than 5, How mary bank accounts do you havet De you here bark account a as sox i ns ae i Ss rp Se reais arpa 10 JANUARI 2022 a WHERE WILL THE MONEY GO? LEARNING CUSTOMERS’ THOUGHTS ON DIGITAL BANK. [rc 30:Rassondentar fray wit aringsaicon | ‘Banking filter used by respondents TT ns: re es i — voice Lae “Se Si Setar, 2 espondents ‘We also found that almost 92% of the respondents have used | Sucor Sekuritas Our respondents are also familiar with all types of banking services. Around 76% of them have savings account and use debit cards (67.5%). Meanwhile, one third of the surveyed customers have time deposits and use credit cards (36%). They also make use of banks! loan facility with housing loans (KPR) and unsecured loans (KTA) became the most used funding schemes. ital banking services in the forms of mobile and internet banking. More than 71% said they preferred to use mobile banking for their transactions while around 16% said they liked internet banking services the most. Fig. 1: Respenderts prefer gal banking serves Banking services preferred by respondents nox a sae = = || Clattrach—Telcbuing Hoiebring ret brig ee oe Do you use mobile or internet banking services? a “Source Sue Seka, 402 responders ‘Source: Sur Sehr, 402 respondents ‘We note that only 11% of the respondents said they preferred customer services at banks’ branch offices. This situation provides an opportunity for digital banks to tap into the market by offering and promoting various features and services in their apps given existing customers’ familiarity with digital banking. Jago and Neobank apps’ domination ‘Our survey found that 44.5% of the respondents have become customers of several digital banks ‘operated in the country, Bank Neo Commerce's app (Neobank) and that of Jago are two most-used digital bank app by our respondents with 29.3% and 21.2% respondents, respectively, chose the apps. ‘Are you a digital bank user? ee Which digital bank's app do you use? st Souee Sur Series, 02 respondents “eure Suc Sekrtes, 402 respondents 10 JANUARI 2022 WHERE WILL THE MONEY GO? LEARNING CUSTOMERS’ THOUGHTS ON DIGITAL BANK | Sucor Sekuritas ‘We learn from the survey that 67.3% respondents in Jakarta, Banten, and West Java are digital bank customers, higher than the nationwide figure of 4.5% of the total respondents. Users from the regions accounted for around 59.3% of the whole digital bank users in our survey, again confirming the banks’ statement that people in big cities are the low-hanging fruit Moreover, the customers actively use the apps with only 36.1% of them open their digital banks" apps just once or twice a week. Respondents do transfer (82.5%) and payment (46.4%) transactions the most on the apps, followed by savings and time deposits. No respondents choose loans as such a feature is stil not available yet on digital banks’ apps at the time as the feature is still under development and will likely be introduced earlier next year across the prominent digital banks. How often do you use the digital bank Most-used features ‘app? (times per wook) o —_— oe “Source Sic’ Sarita, 157 espandents (agtol bank wers) Sou: Sueor Sehurts, 187 responds (dg bonk uses) Small amount of income kept in digital banks, but there’s hope... There is an interesting finding in terms of amount and monthly income portion deposited in the digital bank accounts. While 57.8% of the respondents save a relatively small amount of money of up to IDR 2 mn in the accounts, other 12.7% of the surveyed customers said they deposited more than IDR 20 mn in their accounts. The latter become the third largest group in the survey together with those who save IDR 2 mn to IDR § mn in the accounts. Further, 9.1% of the respondents said they allocated more than 50% of their monthly income to be saved in the digital bank accounts, signalling trust toward digital banks' services, while 44.2% kept less than 10% of their income in such accounts. Fig 17: Most respondents deposited small amount of money Amount deposited In digital bank me portion saved in digital ‘account (in IDR, monthly) ‘bank accounts ase os an Becccl os ae oe | ine tme-eemee ge tems ee em ceo OF “Sour Sue Sekt, 197 respondents (ital bank wer) Saeco Sere, 187 respondent (ital bank wes) 10 JANUARI 2022 10 WHERE WILL THE MONEY GO? LEARNING CUSTOMERS’ THOUGHTS ON DIGITAL BANK | Sucor Sekuritas ‘When we asked about bank accounts to keep most of the respondents income, those who said digital banks reached 13.3%. The figure might be relatively tiny compared to respondents who chose Bank BCA (BBCA 1), but it becomes the third largest group in the survey, beating Bank BNI (BBNI LW) and Bank BRI (BBRI 1). Bank accounts that keep most of Conventional bank accounts owned by Teepondent’ Income respondents se vase ee at I a [ is PPP PESLA SESS pret sy 7 LFS SR é & a ry 17 rd lak Save Bc Skra, 17 repsieas tlk ae) Digital banks’ customers are sticky, but not loyal to one brand. the digital banks, around two-third of our survey's respondents: income portion saved in the accounts. As many as 24.1% of respondents planned to increase the portion to 10%-15% of their monthly income, making as many ‘as 56.6% respondents were willing to increase the portion to up to 50% of their income. Only 34.3% said they will not increase their saving portion in the digital bank accounts. As the customers put their trust said they would increase the! Majority of the respondents (84.6%) will continue to become digital bank customers even after all the promotions end. Will you use the digital bank ‘pp when promos end? Yet 70 ot nenycone me {este son 70h chert ictne 20%

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