T

he Financial Services Authority (OJK) and Bank Indonesia (BI) are preparing a new regulation on branchless banking, evolving the program into digital financial services (DFS).

The next stage of the program will have the same purpose '€” to provide the millions of '€œunbanked'€ and '€œunderbanked'€ with banking access.

Both authorities were still discussing the qualification criteria for banks and telecommunication companies and the types of infrastructure needed, OJK commissioner for banking supervision Nelson Tampubolon said.

The regulation is expected to be completed later this year, according to Nelson.

Meanwhile, Ronald Waas, BI deputy governor in charge of payment systems, said that banks under the BUKU IV category (with core capital of more than Rp 30 trillion, or US$2.48 billion) would likely want to join the DFS program.

'€œIf we look at their standard operating procedures, existing infrastructure and risk management, it seems that they are ready for DFS,'€ he said.

Ronald, however, added that it would be possible for banks in the BUKU III category '€” with core capital of between Rp 5 trillion and Rp 30 trillion '€” to join.

BI initiated the branchless banking pilot project last May, when banking supervision was still under the central bank.

The project involved five lenders '€” Bank Mandiri, Bank Rakyat Indonesia (BRI), CIMB Niaga, Bank Tabungan Pensiunan Nasional (BTPN) and Bank Sinar Harapan Bali '€” and ran until November.

Following the end of the pilot project, the lenders'€™ branchless banking activities are currently on hiatus.

Out of the five, Mandiri and BRI are the only lenders already in the BUKU IV category, while CIMB Niaga and BTPN are in the BUKU III category.

Bank Sinar Harapan Bali, which is a subsidiary of Mandiri, is in the BUKU I category.

According to Mandiri micro and retail banking director Hery Gunardi, it does not plan on carrying out significant changes to its system and will still use its electronic cash (e-cash) engine as the program'€™s platform.

During the pilot project, Mandiri partnered with 10 agents and garnered around 700 new customers in Cirebon, West Java, and Palembang, South Sumatra. Each customer deposited Rp 1 million on average, Hery said.

'€œWe are waiting for the new regulation to be able to proceed, especially on the agents. If it turns out they must have a trading license, we may suffer a setback,'€ he added.

Unlike Mandiri, BRI is more relaxed because some of its agents already possess the trading license.

'€œBesides working with individual agents, we also partnered with cooperatives,'€ BRI corporate secretary Muhamad Ali said.

The state-run bank recorded more than 9,000 accounts under its branchless banking program and collected Rp 61.94 million in deposits.

Separately, BTPN compliance director and corporate secretary Anika Faisal said the bank would like to re-engage itself in the program, which she said was a success.

Other lenders have expressed their interest in the program.

BCA president director Jahja Setiaatmadja said it would explore the opportunities, while Bank Danamon finance director Vera Eve Lim said that it would wait for the release of the branchless banking regulation from the OJK.