FST Media: What are your priorities for the next 12 to 18 months?
Jaya: As a micro banking player in the market, we focus year by year on how we can grow our business. The tight competition in the market has made us develop a strategy to be competitive. One of our strategies is to target the unbanked market. So our highest priorities will be around this and with our initiative in branchless banking, now entering the end of month pilot stage.
FST Media: What technology or innovation is proving to be the biggest game changer in the financial services industry in Asia?
Jaya: Around the globe and without exception in Asia, the industry is talking about digital, mobile or any other technology that can leverage business. Technology is now part of the strategic thought that leaders need to consider. Innovation will start from the technology; we need to think about how we can improve our business through technology.
FST Media: What challenges are you facing in reaching the unbanked population of Indonesia and what are your plans for overcoming those challenges?
Jaya: As the unbanked market is new within the industry in Indonesia, reaching those segments present a lot of challenges for banks, telcos, regulators and others who are involved in the ecosystem. Some of our lessons based on the pilot:
Banks face a low acceptance rate from customers to transact with a phone banking service, [partly] because security and benefits cannot replace the use of cash.
Telcos may not have signal coverage in some areas, and finding the right product for each customer that will become a killer application is a challenge. Another challenge is that regulators are still in the process of preparing formal rules for branchless banking, meaning customers need to be extensively educated.
Lastly, ecosystems need to be created to optimise customers for using the product.
One way to address these challenges could be for the regulator to become involved in the campaign in order to raise the customers trust and fast track the issuance of regulation in order to create certainty in what banks can do, and reviewing our promotions and products to align them with our customers need.
FST Media: How do you see mobile banking affecting the physical branch, and how will the physical bank be transformed?
Jaya: Mobile banking or branchless banking will not leave the physical branch completely. There are transactions that cannot be done through mobile. For example, withdrawals, deposits or loan evaluation. Deposits and withdrawals can be done through agents and this means the physical representatives of the branch still needed.
Mobile banking is used more as a payment tool rather than exchange for a physical branch. It is true that it is impacting cost for a customer to visit the branch, and also from the bank’s perspective, it reduces the cost of handling customers.
In our model of mobile banking and branchless banking, agents function as the expansion channel of traditional banks. With our massive campaign and promotion, the underbanked customers will be removed from the agents. Branches will not need to handle customers who only need small transactions and are using only one product at the branch. It is a must for banks in Indonesia to start thinking about this kind of transformation because of cost, running a branch is expensive. Because the Central Bank of Indonesia also issues regulation for opening new branches that must be covered by Core Capital Allocation. It means every time banks open branches, they have to allocate their core capital to cover risk. This forces banks to transform their operation to mobile, EDC or using third parties which act as representatives of banks.
FST Media: Sinar Sip was one of the first mobile internet options in Indonesia, how have you measured its success and how will you expand on that success?
Jaya: We call this a branchless banking product instead of mobile internet. We started the pilot for this by using agents in 2013 in limited areas consisting of three districts. It is too early to say that what we are doing with Sinar Sip has been successfully implemented. So far what we have learnt from the pilot shows indicators that may be used as measurements for success.
The agent model as an additional channel for savings accounts is working. This is shown by the number of customers opening accounts and making savings and withdrawal transactions; 97 per cent of customers are unbanked, they have never had a bank savings account before.
We work with 10 agents who come under two categories; grocery stores and hand-phone shops. Phone shops are more motivated and better performers. This is because of their familiarity with using cell phones in conducting business and they are accustomed to working for incentives.
We also have an incentives program for agents and customers, which has enabled us to push registration and increase usage.
Those indicators will become our basis for further roll outs when formal regulation is ready and in place. Lessons learnt from global practices will also be considered for expanding this success. For example, IT platforms, ease of user interface, product features, agent incentives, agent management, pricing etc. These are now under evaluation by my team.
FST Media: What are you doing at Bank Sinar to manage risk and security with the growth of branchless banking?
Jaya: We manage risk in branchless banking and Sinar Sip the same as we manage other activities. We start by identifying, evaluating, controlling and monitoring, we identify risky areas and create a control system.
In Sinar Sip the risk is more focused on operational risk and followed by liquidity risk at the agent level. The daily monitoring is carried out by a team who visit the agent on a weekly basis to make sure all operational guidance is tightly followed.
A team is also dedicated to carrying out desk monitoring on transactions. In the case of managing the liquidity risk, we set rules for agents to have a minimum deposit at the bank. Opening an account at an agent is a risky process in Sinar Sip. We address this by setting the system up to recheck documents at the branch after an account is opened through an agent. Customers can then transact, with limitation, directly after opening their account due to KYC processes being minimised, and our security is fully conducted by IT system security.
FST Media: What information sources do you consider invaluable for your job, and why?
Jaya: To me sources must be accessible in a second. In an era with sharp competition, quick decisions are needed based on the information we receive. I am a part of discussion groups on LinkedIn and gain views from around the globe. That helps keep an eye on the hot topics in mobile banking technology, and implementation updates in branchless banking from around the globe.
FST Media: How do you encourage a culture of innovation in your team?
Jaya: Being innovative is part of our corporate culture, alongside trust, teamwork, integrity, professionalism and customer focus. In innovation, we have a forum used for gathering ideas once every three months. We have open communication and discussions, where anybody may give input and suggestions to improve the business, operation etc.
Employees present ideas at morning briefings in the head office and in branches. We visit customers routinely in the field and create innovation based on their needs.
FST Media: What is your definition of success?
Jaya: I do not see success from the number of targets I achieve, although those numbers are also important. In my definition, success is doing the right thing and results will follow. In the era of digital, mobile phone, and developing technologies, my focus is to leverage the business through technologies. I have done the right thing with the use of technology and the fast growth of digital, mobile, mobile banking and branchless banking, because of lessons learnt around the globe and from our pilot.
FST Media: Every leader has a legacy they wish to be remembered for. What is yours?
Jaya: Leadership style is different from one person to another. In my understanding; to lead means to influence. Influence the team through action involving care and to never stop learning in order to inspire. That is the legacy I hope to be remembered for.