JAKARTA, March 16 (The Straits Times/ANN): Indonesia's first full digital bank contender Bank Jago, which is set to sell an equity stake to Singapore sovereign wealth fund GIC, will soon launch its app, paving the way for it to start extending loans to eligible online merchants.
Merchants with good sales track records may apply for a loan by showing digital records of constant revenue or viable business operations, and will not need to pledge any asset as collateral.
Bank Jago is set to complete a rights issue next Monday (March 22) in which GIC plans to spend more than 3 trillion rupiah (S$281 million) to acquire 9 per cent of the bank's enlarged capital.
The rights issue will raise the Jakarta-based lender's capital to about 8 trillion rupiah, from about 1 trillion rupiah currently.
Singapore-based private equity fund Northstar Group, which has a major stake in Bank Jago, has previously co-invested with GIC in the financial service and resources sectors.
Northstar is focused on investing in Indonesia within three sectors: consumer, digital and financial services.
Digital banking for the world's fourth-most populous country will be a game changer, as about a third of its 270 million population are unbanked, while up to four-fifths of them have smartphones.
Regarding Bank Jago's go-to-market strategy, Northstar co-founder Patrick Walujo told The Straits Times: "Experience shows that the most successful banks are usually those that work very closely with a large digital ecosystem.
"Banks' customer acquisition costs are often quite high. To reduce those costs, you need to tap people who already have a habit of transacting with you and then you add a financial solution to that."
Bank Jago is set to launch its app this month once it gains final regulatory approval.
It plans to offer a wide range of services such as loans to Gojek's drivers and food merchants. It may also serve merchants on Indonesian e-commerce platform Tokopedia.
Gojek, which offers ride-hailing and digital payment services, acquired 22.16 per cent of Bank Jago in December last year. It is in talks with Tokopedia for a possible merger.
Gojek boasts millions of drivers and food merchants, while Tokopedia on Tuesday said its merchant partners stood at 9.9 million as at end-2020. Gojek does not disclose these numbers.
When asked if digital banking would disrupt the banking industry, atrick said: "We are not here to disrupt anybody. Our mission is simply to provide the best possible experience and product to our customers.
"Our core focus is our customers and to make sure that the market needs are addressed, and that the customers of Gojek or merchants of Tokopedia... have access to the right financial services."
Patrick said digital banking will be inevitable in the future.
"Even the legacy conventional banks have to have a digital strategy, or at least a strategy to address competition from the new digital players that are coming at them from all sides," he said.
Traditional banks such as Jakarta-based BCA and Bank Mega have acquired smaller banks, which are set to operate as their digital arms. Pensioners-focused Bank BTPN became the first Indonesian lender to start offering a digital banking product, called Jenius, in 2016.
"GIC co-invested in BTPN with us more than 10 years ago. Many of the executives at Bank Jago are from BTPN, and so we and GIC have known them for a long time," Patrick said. - The Straits Times/ANN
Merchants with good sales track records may apply for a loan by showing digital records of constant revenue or viable business operations, and will not need to pledge any asset as collateral.
Bank Jago is set to complete a rights issue next Monday (March 22) in which GIC plans to spend more than 3 trillion rupiah (S$281 million) to acquire 9 per cent of the bank's enlarged capital.
The rights issue will raise the Jakarta-based lender's capital to about 8 trillion rupiah, from about 1 trillion rupiah currently.
Singapore-based private equity fund Northstar Group, which has a major stake in Bank Jago, has previously co-invested with GIC in the financial service and resources sectors.
Northstar is focused on investing in Indonesia within three sectors: consumer, digital and financial services.
Digital banking for the world's fourth-most populous country will be a game changer, as about a third of its 270 million population are unbanked, while up to four-fifths of them have smartphones.
Regarding Bank Jago's go-to-market strategy, Northstar co-founder Patrick Walujo told The Straits Times: "Experience shows that the most successful banks are usually those that work very closely with a large digital ecosystem.
"Banks' customer acquisition costs are often quite high. To reduce those costs, you need to tap people who already have a habit of transacting with you and then you add a financial solution to that."
Bank Jago is set to launch its app this month once it gains final regulatory approval.
It plans to offer a wide range of services such as loans to Gojek's drivers and food merchants. It may also serve merchants on Indonesian e-commerce platform Tokopedia.
Gojek, which offers ride-hailing and digital payment services, acquired 22.16 per cent of Bank Jago in December last year. It is in talks with Tokopedia for a possible merger.
Gojek boasts millions of drivers and food merchants, while Tokopedia on Tuesday said its merchant partners stood at 9.9 million as at end-2020. Gojek does not disclose these numbers.
When asked if digital banking would disrupt the banking industry, atrick said: "We are not here to disrupt anybody. Our mission is simply to provide the best possible experience and product to our customers.
"Our core focus is our customers and to make sure that the market needs are addressed, and that the customers of Gojek or merchants of Tokopedia... have access to the right financial services."
Patrick said digital banking will be inevitable in the future.
"Even the legacy conventional banks have to have a digital strategy, or at least a strategy to address competition from the new digital players that are coming at them from all sides," he said.
Traditional banks such as Jakarta-based BCA and Bank Mega have acquired smaller banks, which are set to operate as their digital arms. Pensioners-focused Bank BTPN became the first Indonesian lender to start offering a digital banking product, called Jenius, in 2016.
"GIC co-invested in BTPN with us more than 10 years ago. Many of the executives at Bank Jago are from BTPN, and so we and GIC have known them for a long time," Patrick said. - The Straits Times/ANN
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