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tate-owned and private lenders are moving to improve their electronic banking (e-banking) products and services with innovations that are part of efforts to grow fee-based income.

Anggoro Eko Cahyo, consumer banking director at state-owned Bank Negara Indonesia (BNI), said the e-banking business would continue to be a major contributor to the lender'€™s total fee-based income.

'€œBNI has seen 54.2 percent year-on-year growth to Rp 817 billion [US$59.9 million] in fee-based income from the e-banking business as of September. That is why we will increase our penetration in e-banking for existing and new customers,'€ Anggoro said.

As part of the efforts, Anggoro said BNI, along with three other state lenders '€” Bank Mandiri, Bank Rakyat Indonesia (BRI) and Bank Tabungan Negara (BTN) '€” was finalizing an integrated ATM system, under the supervision of the State-Owned Banks Association (Himbara), which would be called Himbara Link.

The project, which is expected to be launched this year, will help the four banks to increase income
and efficiency as they will reduce operating costs by sharing machines instead of operating their own ATMs.

'€œBNI spends about Rp 15 million a month on each ATM'€™s operating costs and we usually add 2,000 new machines annually. By sharing ATMs with four state lenders, we can bear the [operating] costs together,'€ Anggoro said.

Anggoro said the four state banks, which run at least 50,000 ATMs altogether across the country, would start the first phase of the project by installing 50 Himbara Link ATMs in Greater Jakarta. Customers of the four banks can use the ATMs free of charge.

'€œWe will continue to the next phase by installing a total 800 ATMs in the first quarter of next year. In the next few years, we will relocate our ATMs [to other places to improve our services],'€ he said.

In order to enable further integration of the system in 2016, Anggoro said the four state banks would also acquire a local interbank network provider, dubbed a '€œswitching company'€, through the subsidiary of each lender '€” known as special purpose vehicles (SPVs).
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The project [...] will help the four banks to increase income and efficiency as they will reduce operating costs by sharing machines instead of operating their own ATMs.

Anggoro said each of the four state banks would have a portion of shares in the switching company through their own SPVs, as Bank Indonesia and the Financial Services Authority (OJK) prohibited banks from acquiring non-financial companies directly.

Currently, network provider Sigma Cipta Caraka (ATM Link), a second-tier subsidiary of state telecommunications firm Telkom, serves as a switching company for ATMs belonging to state-owned banks, along with Artajasa Pembayaran Elektronis (ATM Bersama) and Daya Network Lestari (ATM Alto).

Mandiri finance director Kartika Wirjoatmodjo said the lender had obtained the OJK'€™s permission to establish Mandiri Capital, a venture capital that would act as its SPV to partake in the acquisition of the switching company, adding that '€œwe are ready to inject capital worth Rp 500 billion to build the firm.'€

The importance of mobile banking as a major platform in the future was also stated by Eugene K. Galbraith, vice president director of private lender Bank Central Asia (BCA), particularly as the country has seen huge growth in cell phone development.

'€œAs BCA has a particular risk appetite and commits to being responsible to customers, we always ensure that all electronic apps we use should be secure, convenient and reliable. We cannot open our platform if the apps can'€™t meet those three requirements,'€ Galbraith said.