Indonesia's Bank Jago to turn fully digital; applauds new upcoming regulations for financial services sector

Gojek's e-wallet customers, who use its ride-hailing app, will have the opportunity to open accounts with Bank Jago.
Gojek's e-wallet customers, who use its ride-hailing app, will have the opportunity to open accounts with Bank Jago.PHOTO: REUTERS

JAKARTA - Bank Jago is set to become the first fully digital bank in the country following its recent strategic partnership with ride-hailing and digital payment services firm Gojek.

The small Indonesian bank is applauding the impending digital banking regulation by OJK - Indonesia's Financial Services Authority - saying it would allow its customers to open a bank account on an app run by partner Gojek.

In a recent interview with The Straits Times, Bank Jago commissioner Ms Anika Faisal said:"Banks must be present in digital ecosystems; this is how people do their banking nowadays instead of visiting a bank."

In December last year, Gojek spent US$160 million (S$213 million) to raise its stake in Bank Jago to 22.16 per cent. Gojek's e-wallet customers, who use its ride-hailing application, will have the opportunity to open accounts with Bank Jago, as well as apply for loans.

Singapore-based tech start-up Sea Ltd has also acquired Indonesia's non-listed Bank Kesejahteraan Ekonomi, saying this would allow the firm to serve customers on its e-commerce marketplace subsidiary Shopee, allowing for a seamless experience.

Sea is planning to buy another small, publicly-listed bank, a source told The Straits Times earlier. The two banks would be then merged into a digital bank.

Banking penetration throughout Indonesia's populous archipelago is still low and digital banking is expected to be a game changer in the country. Fifty-two per cent of Indonesian adults, or 95 million, do not have a bank account, according to the World Bank.

Bank Jago has pledged to take a consumer-centric approach, Ms Anika stressed, adding that a digital bank provides customised banking.

"In the past, customers would adjust to bank products on offer. But banks must adjust to the customers. How do customers want to do it? That's the way the bank should do it. Banks now follow the customers, not the other way around," Ms Anika said.

She also applauded the fact that OJK has brought together stakeholders, academics, and bankers to discuss the upcoming regulations and ensure they are business-friendly.

"Our position is: We customise our process to serve customers, while complying with the regulations," she added.