Publicly listed lenders Bank Internasional Indonesia (BII) and Bank Mandiri are looking to travelers in order to boost their fee-based income from the credit card business amid an expected decline in lending growth
ublicly listed lenders Bank Internasional Indonesia (BII) and Bank Mandiri are looking to travelers in order to boost their fee-based income from the credit card business amid an expected decline in lending growth.
BII retail banking director Lani Darmawan said on Wednesday that travel-related activities ranked third in credit card transactions, after groceries and dining.
'While the travel industry predicts between 15 and 17 percent growth next year, we estimate that our travel-related credit card transactions will rise by 20 percent,' she said on Wednesday.
With the target, BII, which is 88.3 percent controlled by Malaysian lender Maybank, hopes the contribution from the credit card segment to total-fee based income will increase to 15 percent in 2014 from less than 10 percent at present.
BII's fee based income, also known as non-interest operational income, reached Rp 1.71 trillion (US$140.53 million) during the first nine months of 2013, up 19 percent from the same period a year ago.
Lani added the increase in fee-based income from the credit card segment would be in line with the bank's 2014 strategy, which sets fee-based income as its main focus.
'We cannot rely much on interest income with the current tight liquidity situation in the banking industry,' she said.
Major banks are including expected lower lending growth next year due to the sharp increase in borrowing costs.
BII and Bank Mandiri expects lending growth will decline to about 15 percent from about 20 percent this year. To achieve the fee-based income target, BII plans to issue 10,000 new cards a month in 2014. As of now, it has issued 700,000 cards, 81 percent of which are actively used by its customers.
Meanwhile, in an effort to attract more travelers, BII inked an agreement with low-cost carrier Citilink Indonesia on Wednesday to provide online ticket payments using the former's ATMs.
According to Citilink president and CEO M. Arif Wibowo, 50 percent of its current sales are generated by direct purchases (not through travel agents), which include payments using the Internet and mobile banking.
Separately, Mandiri said it planned to open new credit card outlets in most of its branches to cater to its traveler customers in 2014.
Mandiri senior vice president for consumer cards group Boyke Yurista said the lender would establish 40 outlets, especially in central and eastern parts of Indonesia.
'We are seeing a rising number of credit card customers in those areas and we expect them to start contributing significantly to our credit card business next year,' he said on Tuesday.
Mandiri has issued more than 3.08 million credit cards.
'Between 1.2 million to 1.5 million of them are actively used and 350,000 are part of our traveler customers segment,' he said.
The bank is targeting to double the issuance of its new credit cards to around 800,000 and to reach more than Rp 1 trillion in fee-based income from credit card usage in 2014.
Similar to BII, Mandiri recently signed a partnership agreement with a third party to boost the use of its credit card among travelers.
It is partnering with Mandiri AXA General Insurance to provide online payment for the purchase of travel insurance using the credit card.
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