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The sector has experienced rapid growth in the past few years, and three large banks are firmly in the lead.
Indonesia has been one of the most supportive countries in Southeast Asia when it comes to the rise of digital banking. In 2016, the Jenius banking app was launched by Bank BTPN (later acquired by SMBC). It was one of Indonesia’s first large-scale digital banking apps, and grew very quickly. This coincided with a tech sector boom the government was keen to support, and financial services authority OJK quickly passed a regulation in 2018 allowing more commercial banks to provide digital banking services. This was followed by a 2021 regulation governing the launch of fully digital banks, which are standalone digital platforms rather than an offshoot of existing commercial banks.
Full digital banks perform the same functions as conventional banks – take deposits, make loans – but do so mainly through digital platforms. Because they do not need to maintain large networks of physical branches, they can theoretically operate with less overhead. Another potential advantage is that because most services are online, digital banks can offer a level of convenience and access that conventional banks can’t. This should allow them to scale faster and reach a wider customer base, including those who have never had an account at a traditional brick-and-mortar bank.
