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ublicly listed Bank CIMB Niaga, the country'€™s fifth-largest lender by assets, is planning to strengthen its electronic banking business in Indonesia by launching Facebook banking service in the third quarter of this year.

CIMB Niaga president director Arwin Rasyid said that the bank had started its expansion to lead the country in electronic banking by establishing Rekening Ponsel, the cellular phone-based bank account through which customers can make banking transactions on their phones '€” the first in Southeast Asia.

'€œVery soon we will launch Facebook banking. Hopefully, sometime in the third quarter this year. You can send money to each of your Facebook friends through the CIMB platform,'€ Arwin said at a media luncheon on Tuesday.

Data from CIMB Niaga shows that the contribution of branchless banking in total financial transactions reached only 64 percent in 2011, while in 2013 the percentage rose to 78 percent.

'€œThree to four years ago, the number of transactions through the branches would be like 50 percent. Now the transactions through the branchless [portals] is more than 75 percent,'€ Arwin said. '€œAnnually, the growth is 5 to 7 percent. In five years it will grow to 90 percent,'€ he said.

The Malaysian-based bank records that the number of Rekening Ponsel users reached around 274,000 by the end of 2013. The number of users increased 32.1 percent to 362,000 by the first quarter of 2014.

Meanwhile, the number of monthly transactions using Rekening Ponsel in the end of 2013 reached 1.07 million. That number increased 31.5 percent to 1.4 million in the first quarter of this year.

The number of users of CIMB Clicks and Go Mobile also grew 29.5 percent and 92 percent, respectively, year-on-year in the first quarter of this year.

On the same occasion, CIMB Group chief executive Dato'€™ Sri Nazir Razak said that CIMB was '€œstructurally'€ disadvantaged in Indonesia. They were, however, not trying to overcome that in the conventional way of buying more ATMs or opening branches.

'€œWe will overcome it by becoming the leader in digital banking in Indonesia,'€ Razak told reporters. '€œCulturally, Indonesians are very comfortable with ATMs, so I'€™m going to break them out of their comfort zone. I'€™m going to make them comfortable with the phone,'€ he continued.

He also said that banks now really had to grapple with what to do with branches, saying that branches would have to be positioned more for sales rather than transactions.

'€œIf you look at Bank 3.O, its quite clear that within three to five years the alternate channel will be the branch, the primary channel will probably be the mobile phone,'€ Dato said.

CIMB Niaga reported a 4.2 percent increase in net profit during the January-March period of this year to Rp 1.1 trillion (US$92.9 million) compared to the same period a year earlier, when the lender posted net profit growth of 12 percent.

The net profit growth in the first three months of this year was driven by a 9.5 percent increase in lending to Rp 160.96 trillion.