Embracing Digital Transformation to Engage

Embracing Digital Transformation to Engage
Customers Now and in the Future
Top row (from left to right): Dev Yusmananda, Head of IT Planning, Bank BTPN; Karim I. G. Siregar, Director, Bank BTPN;
Sugito Lie, General Manager, Bank Central Asia; Inayat Hisyam, Director – Retail Banking, Bank Chinatrust (Bank CTBC) Indonesia;
Vincent Suteja Tee, Senior Vice President – Alternate Channel Retail Banking Head, Bank Danamon; Juni Rachmat Mancanegara,
VP – Product Management & Marketing Communication Head, Bank Danamon; YB Hariantono, Director of Operations & IT,
Bank Mega; Suhaimi Gohandy, CIO, Bank Sinarmas; Leonardo Koesmanto, Head, Marketing & Corporate Branding, BII – Maybank.
Bottom Row (from left to right): Lee Yiang Ming, Head of IT, BII – Maybank; Gusnawan Tjan, Head of Electronic Channel,
BII – Maybank; Riana Taluki, Head of Retail SME, BII – Maybank; Jeffrey Sugiharto, IT Operation Head, Mutiara Bank;
Bernard Lokasasmita, SVP, Head of Service and Operational Excellence, Permatabank; Sumit Puri, Vice President and CIO-IT,
Prudential Corporation; Samuel Sahata, Business Intelligence & IT Finance Head, Rabobank Indonesia; Fabian Sz​ijarto,
Senior Solutions Consultant, Misys; Mukul Agrawal, Regional Sales Director – Core Banking & Digital Channels, Apac, Misys.
Amid growing competition and changing
demographics, Indonesian financial
services organisations are sharpening
their focus on digital services and
improving customer experience.
FST Media and Misys hosted an
exclusive roundtable luncheon with
leaders from prominent Indonesian banks
to uncover how they are transforming
services. The discussion also focused on
how regulatory measures in Indonesia
will pave the way for a stronger online
financial services sector.
Executives recognised the need for
banks to adapt to changing customer
online, mobile and digital offerings
to cater to the new wave of techsavvy customers.
Keynote speaker, Karim I. G.
Siregar, Director, Bank BTPN, noted
that Indonesia’s Gen Y population –
born between 1981 and 2000 – is at
least 80 million-strong and will graduate
to become the country’s primary
banking customers within the next two to
five years.
“They are very tech-savvy and for
us, they are critical,” said Karim,
adding that Gen Y’s expectations are
increasingly being shaped by a
combination of lifestyle changes as well
as online experiences.
The Indonesian market varies widely
between the unbanked and lower-middle
income population. With the growth in
mobile phones, particularly smartphones,
those segments of the market will
also need a different set of services,
Karim added.
“We need to define which [market]
segment we would like to be in
and whether that is relevant for
us – is it internet, mobile, or digital
banking?” said Karim, adding that
one important competitive edge for
banks will be determining their unique
value proposition.
including Bank Indonesia – the country’s
central bank – and Indonesia Financial
Services Authority, are also pushing for
digital and online financial inclusion
with recent policies such as ‘e-Money’.
According to Karim, banks will also
need to define what digital means
within their own organisations. He
added that traditional banking, which
has historically included voluminous
paperwork, is proving to be too complex
for the new generation of customers.
“You need three or four signatures to
open an account – that is cumbersome
and the next generation will definitely
not respond well to that,” he said.
experience will be a huge challenge for
banks focused solely on sales, risk, credit
and operations.
Digitising conventional banking
Executives agreed that the cashdominated Indonesian market will see
an evolution of both conventional and
digital banking.
Inayat Hisyam, Director – Retail
Banking, Bank Chinatrust (Bank CTBC)
Indonesia, warned the absence of physical
branches would make it difficult for
Indonesian banks to do business because
customers continue to engage with their
banks at the physical branches first. A
physical presence also helps create trust
and solidifies customer relationship,
according to him.
“If I never see the bank, I would not
want to entrust my money with that
bank,” he said, adding that on the
other hand, PayPal is increasingly
becoming popular among the younger
According to Suhaimi Gohandy, CIO,
Bank Sinarmas, it is still difficult for
banks to reach those living in remote
“[Indonesia] is too big to expand via
the branch network. That is why many
banks are mainly focusing on expanding
this channel within Java as it is the most
populated with good infrastructure,”
said Gohandy.
Bernard Lokasasmita, SVP, Head of
Service and Operational Excellence,
Permatabank also commented on Returnon-Investment (RoI) as also a crucial
question for many bank executives.
“The challenge is determining how
much revenue can be generated through
mobile, internet or digital banking.
Most banks are already moving towards
digitalisation, but it remains unclear
how we are going to maximise [RoI]”
said Lokasasmita.
Mukul Agrawal, Director, Core
Banking and Digital Channels, APAC at
Misys, noted that for many banks, digital
is still primarily a channel to provide
transactional services while new sales
are driven through the branch network.
“Digital banking is available only
for existing customers to perform
transactions. So how do we turn
this around?” he said, adding that
many banks in Australia and Europe
have started generating a significant
portion of their sales from digital
channels, an important emerging
channel for Indonesian banks.
He added that banks need to transform
their processes and organisation
structure in addition to technology to
achieve this transformation. Several
large banks are taking the approach of
setting up digital-focused subsidiaries
since transforming an existing bank is
difficult and takes time.
He cited the example of Zuno
Bank AG in Europe, a subsidiary of
Raiffeisen Bank.
Leonardo Koesmanto, Head, Marketing
& Corporate Branding, BII – Maybank,
noted that traditional marketing
has historically focused on utilising
conventional media such as newspapers
and billboards. But that is set to change.
“In the digital age we can measure the
effectiveness of marketing campaigns
the next day. If it does not work, we
can change it,” said Koesmanto. “The
objective is to increase sales but the byproduct will be creating awareness.”
Lee Yiang Ming, Head of IT, BII –
Maybank, cautioned that the challenge
with the Asian market is that banks
are treating the digital platform as a
conventional platform by trying to make
it work as a bricks-and-mortar business.
“You need three or four signatures to
open an account – that is cumbersome
and the next generation will definitely not
respond well to that.”
– Karim I. G. Siregar, Bank BTPN
“In the digital age we can measure
the effectiveness of marketing campaigns
the next day. If it does not work,
we can change it.”
– Leonardo Koesmanto, BII – Maybank
“Digital is really about customer
– Lee Yiang Ming, BII – Maybank
“Successful banks in the digital space
will differentiate themselves,” Lee said,
adding that if banks try to emulate a
bricks-and-mortar business in a digital
world, they will fail.
“Banks need to move away, or at
least segregate, the kind of models that
they want to use. Digital is really about
customer experience,” said Lee.
According to Sumit Puri, Vice President
and CIO – IT, Prudential Corporation,
conventional and physical channels are
likely to evolve into an advisory role.
“They will be focused much more on
high net-worth individuals, giving them
financial advice and becoming more
involved in terms of needs and analysis
on the customer,” said Puri.
“Whereas the other channels will
probably make new sales to the Gen Y and
Gen Zs – it will be very different evolution
and you have to treat it differently. It
will not be the conventional bricks-andmortar approach. ”
Disruptive competition
“We do not have to do wholesale
transformation to face disruption.”
– Mukul Agrawal, Misys
Indonesian banks also face increasing
competition from not only domestic and
pan-Asian banks but also new entrants
such as telecommunication companies
and online players like eBay, Google and
Facebook, executives said.
Banks will need to assess the impact of
competition on their IT infrastructures
and prepare for the long-term, noted
Karim. In most cases, banks’ existing
infrastructure will not cope with the
changes, he added.
“The IT role has now transformed,” said
Karim. “In the digital era, if something
does not work, it is IT; you cannot blame
anybody else.”
According to Karim, banks will need
to balance three things – time to market,
quality of performance, and how they
want to build IT going forward. They will
also need to be in full partnership with
business objectives.
“Prioritisation is key,” he said, adding
that financial services organisations will
also need to find the right technology
Agrawal emphasised that digital
will be the way forward for Indonesian
banks. “[Indonesian banks] need to
know how to make it feasible, what to
innovate, and how to tackle challenges,”
said Agrawal.
Agrawal cited the example of Alibaba
and its recent launch of YuE’ Ba, an
online high-interest product in China
that received deposits in a short span
of time, in what was a direct threat to
conventional banks.
“That shook up a lot of banks because
China is heavily regulated and the
traditional banks were not expecting this
kind of change,” said Agrawal.
According to him, what worked for
Alibaba was customer experience.
“As [Alibaba] did everything on mobile,
it did not face the infrastructure issues
surrounding physical processes and it
could roll out quickly, acquiring a lot of
customers,” he said. “The lesson here
is that we do not have to do wholesale
transformation to face disruption.
We need to look for smarter ways to
achieve results.”
According to Fabian Sz​
ijarto, Senior
Solutions Consultant, Misys, banks
can reinvent their online customer
relationships with innovative products.
He cited the example of European banks
offering personal financial management
(PFM) tools that help customer track their
savings, spending and monthly budgets.
“In Western Europe, [customers]
are more financially educated and
advanced in thinking not just about today
but planning for the future as well,”
said Fabian.
“Therefore functionalities like PFM
that have become popular.”
Jeffrey Sugiharto, IT Operation Head,
Mutiara Bank said that mobile banking in
Indonesia still needs to be supplemented
with an education effort.
“The challenge is how to educate
[customers] to use mobiles,” said
According to Vincent Suteja Tee, Senior
Vice President – Alternate Channel Retail
Banking Head, Bank Danamon, certain
functionalities of Internet banking
still cannot be replaced with mobile as
mobile phones are still limited in terms of
screen sizes.
“Things like online shopping are better
suited for larger screens while mobile will
likely be more suited to payments such as
digital wallets,” noted Suteja Tee.
Agrawal added that Misys’ message to
banks is to collaborate with disruptive
competition. “The trend is co-opetition,”
said Agrawal, noting a bank in Nigeria
has partnered with Facebook to help
its customers originate transactions like
account opening on its Facebook page. He
added that many other banks are seeing
10 to 15 per cent of their transactions
on Facebook.
Agrawal emphasised that while
consistent customer experience across
channels including online and mobile will
be key, tailored and relevant experiences
will be important to improve customer
“To make things more complicated,
every customer’s expectation is different,
so you can’t have a unified experience
for all segments and customers. While
we are challenged to introduce new
features, we need to keep in mind that
the new feature you are offering cannot
be the same for all customers,” said
Agrawal. “The customer should be able
to decide the layout, what functions are
available to him, and he should be able
to switch off features he doesn’t want
to use.”
Puri explained that Prudential is using
a unified communication platform,
which is proving to be very effective at
creating a consistent experience across
channels. He added that financial
services organisations could glean
important information from social media
like Facebook to create more personalised
Agrawal also noted Misys’ innovation
lab, which collaborates with organisations
such as Google to help tailor its products
for its clients.
“If Google releases a product that is not
yet commercialised, we have access to
that [via the lab]. We have access to smart
watches, iBeacon and are now working
with biometrics,” he said.
Agrawal added that for many banks,
being seen as innovative will be equally
“All innovations may not derive
business but if it helps in creating visibility
and branding, often the return is enough
to justify the spend,” said Agrawal.
Cashing in on cardless
Executives cited Indonesia’s cashdominated economy as a short-term
challenge for the mobile payments space.
Suteja Tee noted Bank Danamon’s
recent launch of Facebook features that
help its customers transfer money via their
Facebook friends lists and withdraw cash
through ATMs without using a card or an
account. He added that cash continues
to be important because in Indonesia, a
small fraction of cash is still relevant.
Suteja Tee added that Faceboook
feature will also help Bank Danamon
comply with the the government’s
financial inclusion initiatives.
According to Fabian of Misys, one
solution that has been deployed in
a similar market in India is the use
of cardless transactions at the ATM.
Through these transactions, customers
can send a code via their mobile phones
to generate a cash payment at the ATM.
Lokasasmita of Permatabank cautioned
both security and education will be
challenges for banks to address as they
roll out mobile offerings.
“We have to educate [customers]
and get them comfortable first because
but if the code is forced to somebody
mistakenly, how can we control the
transaction?” said Lokasasmita.
According to Koesmanto of BII, both
cashless and cash payment methods
will evolve depending on customer
“There will be space for everybody
whether we want to pay with cash or not,”
Koesmanto said.
“Cash continues to be important
because in Indonesia, a small fraction of
cash is still relevant.”
– Vincent Suteja Tee, Bank Danamon
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