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ommonwealth Bank Indonesia, a subsidiary of Commonwealth Bank of Australia, is tapping into the growing mobile-phone banking market in the country as the total number of middle-class consumers continues to expand in the largest economy in Southeast Asia.

“Up to 80 percent of [the Indonesian] population is younger than 40 years old, 35 percent of them use social media. If you look at the way people interact and travel in Indonesia, mobile phones play a key part,” Commonwealth Bank Indonesia’s director of retail and business banking, Ian Phillip Whitehead, said in Singapore on Friday.

“Indonesia is [BlackBerry maker] RIM’s biggest market outside Canada and the world’s top user of Facebook and Twitter. There is no question that mobile [banking] is going to become more important,” he added, pointing out that the growth in the number of mobile phone banking transactions is much faster than that of Internet banking transactions.

Since the bank launched its mobile banking services in Indonesia in June 2011, out of 150,000 customers, 20,000 have downloaded Commonwealth Bank mobile banking applications, which are available on BlackBerry and iPhone platforms.

“Of those 20,000 customers, 7,500 are active users of our mobile banking platforms,” Whitehead said, adding that 35 percent of its total customers also use the bank’s Internet banking services.

Commonwealth Bank’s mobile banking applications have also changed its customers’ banking habits.

“Before mobile banking services, customers’ transactions peaked only during lunch time. After the launch of mobile banking, the number of transactions peaks before and after lunch time,” he said.

The bank’s mobile banking applications offer all the features that are available in its Internet banking service, such as internal and external money transfer, as well as investing.

“Users can purchase mutual funds through the mobile banking application,” Whitehead said as an example.

The bank aims to increase its number of mobile-banking applications users.

“Our target is that 100 percent of our Internet banking users will use our mobile banking services too, by the end of this year,” Whitehead said.

However, the bank accepts that they face many challenges in reaching the target, including customers’ confidence in the security of the service and the age gap.

The bank’s senior vice president head of corporate communications, Haviez Gautama, acknowledged that the security issue had dissuaded customers from shifting to mobile banking.

Whitehead said that the bank had invested from US$400,000 to $500,000 to develop a mobile banking system that was simple and secure.

“We have multiple layers of security in mobile banking. We don’t store any transaction data on the phone. So it’s always transacted and transmitted. When transacted, it’s fully encrypted — even if it’s intercepted nobody can do anything with it,” Gazo said, adding that customers had to combine passwords with temporary passwords generated when making the transaction.

Commonwealth Bank Indonesia was awarded “Special Commendation for Mobile Banking” during the Banking & Payment Asia Trailblazer Awards 2012 on Friday in Singapore.