Indonesian Bank Woori to launch mobile banking services this year
Mid-size lender Bank Woori Saudara Indonesia will launch internet and mobile banking services and postpone branch expansion in 2017. The bank estimates that its digital expansion will cost less than $100m this year. As part of the digitisation strategy, it has also partnered with Investree Radhika Jaya, the peer-to-peer lending marketplace. Only 60 million, or half, of Indonesian adults have bank accounts compared with 133 million who have an internet connection, 50% of whom have access via mobile phones.

Jakarta. Bank Woori Saudara Indonesia 1906, a mid-size lender formed though a merger between Bank Saudara and Bank Woori Indonesia, has decided to postpone branch expansion this year to make room for digital banking development, an executive said on Tuesday (24/01).

Bank Woori Saudara is the latest lender that sees cost-cutting potential in the growing digital lending trend in the country, where more people have mobile phone than bank accounts.

"Opening a new branch is costly [...] This year, we will launch our internet and mobile banking instead," said Denny Novisar Mahmuradi, Woori Saudara small and medium enterprises business and consumer director.

Denny estimates that the investment for the lender's digital expansion will be less than $100 million this year, but it could reach new customers at a faster pace. The lender currently has 140 branches and 70 automated teller machines across Indonesia.

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Financial Services Authority (OJK) data shows that only around 60 million, or roughly half of Indonesian adults, have banks accounts. On the other hand, 133 million Indonesians are connected to the internet, with almost half of them using mobile phone to do so, according to data from the Indonesian Internet Service Provider Association (APJII). Also, there are more than 350 million mobile phone subscribers in the country, as it is not unusual for one person to have two or more mobile phones.

Besides internet and mobile banking, the lender also signed a memorandum of understanding with Investree Radhika Jaya, the company behind lending marketplace Investree, as part of its digitization strategy.

"The internet and mobile banking services are synchronized with the collaboration with Investree. Without mobile banking, the collaboration will not work," he said.

Investree is a peer-to-peer lending marketplace that acts as a matchmaker between lenders and debtors.

The bank agreed to promote Investree's products to its customers in exchange for fees. Danny said the bank and the financial technology company are still negotiating the fees.

Starting in February, Bank Woori Saudara will encourage its customers to lend money directly to debtors through Investree with a return of up to 20 percent per year and interest rates as low as 0.9 percent a month for borrowers.

In comparison, the interest rates on rupiah-denominated time deposits are about 6 percent per annum at local banks and the maximum interest rate on a credit card loan is 2.25 percent per month.

"Financial technology is not our competitor but it complements the banking industry," Denny said.

The collaboration between Bank Woori Saudara and Investree came just about a month after the OJK released a new regulation on information technology-based lending services in December. The authority estimates that digital lending in the country may reach Rp 1 trillion ($75 million) this year, growing nearly seven-fold from last year.

Investree chief executive and cofounder Adrian Gunadi said he believes the regulation will allow for more cooperation between financial technology companies and banks in the country.

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