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BCA is leading the way with technological innovation and uptake of digital options is growing fast. Efma's Anne-Laure Jozan catches up with Armand Wahyudi Hartono, Deputy President Director of BCA, to find out more.
How are digital innovations shaping BCA’s services to its customers?
From the beginning, BCA has always offered diverse financial solutions through banking transaction services for many diverse groups and ages. And now everyone can enjoy the banking transaction ease and convenience BCA offers, enabled by strong inter-branch links, an extensive ATM network, and all the other electronic banking services the Bank offers.
In 2018, the number of transactions through the digital network (mobile and internet banking, including ATMs) reached 98% of total BCA transactions. This enormous growth has encouraged BCA to continue to increase the capacity and capability on its technology infrastructure.
With increasingly tight liquidity in 2018 and 2019, BCA aimed to maintain a strong position by developing its transaction banking franchise. This strategy enables BCA to maintain its Current Account Saving Account (CASA) position, which is the large contributor to BCA’s third-party funds.
To support this position, BCA is strengthening its capability to provide payment settlement services by providing a multi-channel network. Our values are to deliver convenience, secure and reliable services of all transactions, and these values will remain as the focus in building the transaction banking infrastructure, including payment and cash services.
What plans do you have to digitize processes in line with the new cashless payment solutions that are emerging?
The rapid advance of technology, along with the fact that most communities are embracing these changes, has encouraged us to adapt to the new opportunity that exists, developing services which allow customers to carry out transaction banking digitally. We are building various methods of payment for online transactions related to e-commerce and cashless payment settlement.
A survey we conducted of financial services customers in Indonesia shows considerable growth in the adoption of internet banking as well as mobile banking. The survey also shows that mobile banking growth is faster than internet banking. This indicates that digital channels are becoming increasingly crucial in building loyalty and generating growth for financial institutions.
In addition to the rapidly increasing adoption of the internet and smartphones, the growth in e-commerce plus the strong digitization push by Indonesian banks has stimulated demand. Banks’ efforts to encourage customers in using online banking are also encouraging a central role for customers in trying digital channels.
Our findings show that competition from players outside the banking sector (like Gopay, Ovo & Dana) will be intense and that banks should continue their digitization efforts, moving quickly to attract new customers and build loyalty in their existing customers.
What are the biggest challenges banks face in this process?
When banks want to improve their digital channels to meet the customer’s experience or to disrupt the physical channel, they will face barriers such as rules that are set by regulators or governments. On the other hand, fintechs have the flexibility and agility to create new breakthroughs or different ways of offering financial services without the hassle of dealing with regulations.
To cope with these issues, BCA has a three-fold approach. Firstly, we must grow our customer base fast. We are targeting 30 million customers in the next three years. Secondly, we need to make sure that current and future customers love – and depend on – BCA’s mobile banking. We work hard to make sure that BCA’s mobile banking (M BCA) and other BCA channels connect us and our customers. Our channels will provide every solution for their daily financial needs (super apps). Thirdly, we need to support open banking through APIs.
At BCA we realize that we cannot regard fintech or techfin companies as competitors. Collaboration with them will be the perfect strategy because we have the capability to become the bridging solution (VA, APIs, Payment Gateway) between front-end fintech players and customers. By working together as their partner, BCA will secure the advantage of having the data as well as the opportunity to grow third-party funds.
What does the term ‘digital transformation’ mean to you in this context?
Digital transformation will reduce cost, speed up processes, improve the customer experience and, last but not least, provide us with data. Data will be a key differentiator for banks’ business in future. BCA invested around IDR 5.2 trillion in 2019 as cost and capex for technology (security, software and hardware). This is a 24% increase compared to last year’s investment in technology and is a significant investment for an Indonesian bank.
So far we have been quite successful with our digital initiatives. Our mobile banking has launched BCA Keyboard, an embedded log-in feature of M BCA via cell phone keyboard. Customers don’t have to log out from their chat just to log in to our mobile apps.
QR ku (My QR) has also been launched to help customers who need to do a one-time payment without having to input an account number. Our Virtual Assistant (VIRA) in Line apps is one of the leading chat bot apps for banking in Indonesia.
What has the Bank learned from these transformative initiatives?
We have learned that launching products is not a quick fix – it does not always immediately meet our customers’ requirements. Especially if it’s related to digital, we have to create the culture and embrace the customer experience before the product will be well adopted. But if we can create solutions that are useful and convenient, customers will become loyal and attached to us.
Also, it’s not just about data. Investing in our people is another key success factor – changing mind sets, encouraging design thinking, pushing agile ways of working, and being willing to hear the voice of customers. It’s about empowering the leadership and creating ways to enhance digital skills for leaders, while adopting new technology and analytic behaviours, UX UI processes and customer persona techniques to help to create new products.
This interview is included in APAC Review 2019: Banks of the future