March 15, 2017 11:30 pm JST

Bank Rakyat Indonesia brings in Telkom exec to foster fintech

Rivals spur state lender to raise digital game; venture capital unit in cards

ERWIDA MAULIA and WATARU SUZUKI, Nikkei staff writers

A digital branch of Bank Rakyat Indonesia

JAKARTA -- Bank Rakyat Indonesia on Wednesday appointed an executive with the country's largest telecommunications company to its board, in a move that reflects intensifying competition in financial technology.

The state lender's shareholders approved the appointment of Indra Utoyo, who serves as director for innovation and strategic portfolio at state-owned Telekomunikasi Indonesia, or Telkom. Utoyo has overseen Telkom's digital business development over the past several years -- including the operation of venture capital arm MDI Ventures, which has an office in Silicon Valley and runs an incubation program for Indonesian startups.

BRI must continue to adapt to "challenges and changes in the market, where the [boundaries] are disappearing between the banking sector and the telecommunications sector," Sunarso, the bank's vice president, told reporters after the meeting. "They increasingly overlap each other."

He added that the bank, whose focus on microfinance made it the top profit earner in Indonesia's banking industry last year, also discussed establishing a venture capital unit geared to microbusinesses.

"BRI will stay focused on the micro, small and medium segments," Sunarso said. "Among the challenges in the fintech industry is how to lower prices by improving efficiency -- which requires digitalization." This, he noted, explains the appointment of a director from a telecom company. 

Wednesday's shareholders meeting also saw the replacement of BRI President Asmawi Syam with Suprajarto, who had served for eight years as the bank's director for networks and services before moving to another state lender, Bank Negara Indonesia, as vice president in 2015.

BRI has maintained a dominant market share in loans to small businesses by running a network of more than 10,000 offices across the archipelago. This way, it caters to the needs of local communities. Last year, it launched its own satellite to support its outreach to Indonesia's remote regions, as well as its efforts to go digital.

But amid the rising popularity of mobile banking, BRI's physical advantage is being put to the test by stiffer competition. Bank Mandiri, the largest state-owned bank by assets, set up a venture capital unit in 2015 that has made a series of investments in startups that provide financial services to small businesses.

"We want to be able to work with third parties that will enable us to expand in new technologies," Bank Mandiri Director of Finance and Treasury Pahala Mansury told reporters on Tuesday.

Bank Central Asia, Indonesia's largest private bank, also announced the establishment of a $15 million venture capital unit in late January.

Telecom companies like Telkom and Indosat Ooredoo, as well as some new startups, have joined the battle over Indonesia's expanding fintech market as well.

Apart from the venture capital plan, BRI on Wednesday said it is looking at establishing its own securities unit.

Asia300

PT Bank Rakyat Indonesia (Persero) Tbk

Indonesia

Market(Ticker): JKT(BBRI)
Sector:
Industry:
Finance
Regional Banks
Market cap(USD): 26,394.8M
Shares: 24,669.2M
Asia300

PT Telekomunikasi Indonesia Tbk

Indonesia

Market(Ticker): JKT(TLKM)
Sector:
Industry:
Communications
Major Telecommunications
Market cap(USD): 33,890.6M
Shares: 100,800M
Asia300

PT Bank Mandiri (Persero) Tbk

Indonesia

Market(Ticker): JKT(BMRI)
Sector:
Industry:
Finance
Regional Banks
Market cap(USD): 21,323.8M
Shares: 23,333.3M
Asia300

PT Bank Central Asia Tbk

Indonesia

Market(Ticker): JKT(BBCA)
Sector:
Industry:
Finance
Regional Banks
Market cap(USD): 32,592.1M
Shares: 24,655M

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