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Conglomerate-backed digital banks are here to stay
Business tycoons have been tapping into the digital banking industry through acquisitions, and experts say they are in it for the long run.
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Illustration of digital banking. (Shutterstock/File)
B
usiness conglomerates and some of the richest individuals in the country have been flocking to invest in digital banking as consumers rapidly adopted online services during the COVID-19 pandemic.
Bank Indonesia (BI) estimates that digital banking transactions grew 19.1 percent to Rp 32.2 quadrillion (US$2.25 trillion) last year, much faster than the 1.5 percent increase logged in 2020.
Last year, at least seven firms deemed themselves digital banks, while seven more were waiting for their Financial Services Authority (OJK) license to offer digital banking services.
“I believe this trend is largely driven by conglomerates in the banking industry that allocate their capital in a pivot to digital banking,” University of Indonesia economist Fithra Faisal told The Jakarta Post on Monday.
Indonesia has at least seven tycoons with major ownership in domestic banks offering digital services, ranging from well-established Bank Central Asia (BCA) – with its BCA Digital subsidiary – to small, new firms like Allo Bank.
PT Mega Corpora, owned by tycoon Chairul Tanjung, became the largest stakeholder in digital lender Allo Bank, after acquiring the bank last year, when it was named Bank Harda Internasional.
Diversified conglomerate Salim Group, according to recent reports, is set to acquire a stake in Allo Bank through a rights issue to make it the fifth-largest stakeholder in the bank.
