10 March 2021
Digital Banking Trends: A Transformation in a Pandemic Era
In TechnoBusiness, Spire consultant Eka Rivia Sakti shares his views on the latest digital banking trends in Indonesia, alongside the arising risks and opportunities. Despite promising developments in Indonesia’s adoption of digital financial solutions, much work is needed to develop supervisory frameworks to mitigate the privacy risks that come with increased digitisation.
Having come a long way since the concept of digital banking was first introduced in Indonesia 5 years ago, today Indonesia is a booming ground for digital banking. Not only has the monthly usage of digital banking channels in Indonesia grown twice as fast as other Asian emerging markets, Indonesia also ranks the second highest for the willingness of non-digital natives to adopt digital banking.
Main drivers of banking digitisation
Indonesia’s 2.9 million young professionals are the key drivers of digital technology adoption. Home to high rates of internet and cell phone penetration at about 64%, Indonesia has the existing infrastructure to support the rapid acceleration of digital payments, hastened by the pandemic’s health and safety concerns.
In April 2020, a 200% spike in mobile banking registration was recorded in Indonesia, alongside a 50% drop in physical transactions at bank branches in the same month. Movement restrictions gave rise to trends such as touchless payments, while digital loans and working from home served as new habits set to transcend the pandemic.
Mitigating the Risks
While the prevalence of digital banking is a promising development for Indonesia, customer data infringements and cybersecurity also pose bigger challenges. From the aspect of regulation and government support, Indonesia will have to develop the required regulatory framework to improve supervision of digital banks.
Click here to read the article on TechnoBusiness
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