January 28, 2017 12:05 am JST

Bank Central Asia investing $15m in fintech

Indonesia's largest private bank joins race for unbanked market

WATARU SUZUKI and ERWIDA MAULIA, Nikkei staff writers

Indonesia's Bank Central Asia is to invest 200 billion rupiah ($15 million) in financial technology companies in its race with domestic rivals to use startups to reach customers previously considered "unbankable."

BCA is to own 100% of a new company, Central Capital Ventura, according to a stock exchange filing on Friday. CCV wants to invest in and collaborate with fintech companies "that will support BCA's financial service ecosystem as well as that of our subsidiaries."

With some 1,200 branches and 17,000 automated teller machines, BCA has one of the largest retail banking operations in Indonesia, and runs the country's most advanced payments system. It is the largest private bank in Indonesia with 660 trillion rupiah in assets as of September.

Less than half of adult Indonesians have bank accounts, but opening branches in rural areas lacking infrastructure is prohibitively costly. A growing number of fintech startups, many using cutting-edge technology to analyze credit quality and process payments, are filling the gap with their capacity to reach "unbankable" customers through smartphones.

In 2016, state-owned Bank Mandiri set up a 500 billion rupiah venture capital unit Mandiri Capital Indonesia. The aim was to foster fintech startups, particularly those catering to smaller businesses. "Based on studies, this is quite tough -- 80-90% of startups fail," said Hira Laksamana, MCI's chief financial officer.

Indonesian banks are competing with telecommunication companies and startups that see promise in fintech because mobile phones far exceed bank accounts. The largest company, state-owned Telekomunikasi Indonesia, has its own mobile payment service as well as a venture capital arm called Metra Digital Innovation that incubates "payment solutions" startups. MDI has offices in Jakarta, Singapore, and Silicon Valley supporting incubation and accelerator programs.

Asia300

PT Bank Central Asia Tbk

Indonesia

Market(Ticker): JKT(BBCA)
Sector:
Industry:
Finance
Regional Banks
Market cap(USD): 34,830.48M
Shares: 24,655.00M

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access (5 articles per month without subscription)
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access (5 articles per month without subscription)
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.