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After recent sell-offs, is traditional retail banking dead in Indonesia?
Multinational banks are looking for “smarter” ways to serve Indonesia’s fast-growing consumer loan sector without high costs and risks, even as more and more local lenders join the digital banking bandwagon.
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The Standard Chartered logo sign is displayed on the bank’s branch at Forum of Exchange Square in Hong Kong, China, in this stock image. (Photo courtesy of Shutterstock)
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mid fiercer competition in Indonesia’s retail banking sector, global lenders have been changing their strategy, including by selling retail portfolios, finding new customers through tech platforms and channeling funds through peer-to-peer (P2P) apps and multifinance firms.
Analysts believe the role of conventional retail banks will shrink as their products are increasingly replaced by new ones that leverage novel technologies.
However, some customer segments that value human interaction will still need traditional banking solutions.
In January 2022, Citi announced it would be selling its retail banking and credit card business in Indonesia and other Southeast Asian countries to Singaporean lender UOB for US$3.6 billion.
In April 2023 another global bank, Standard Chartered, disclosed a plan to sell its retail loan portfolio in Indonesia to Bank Danamon, a local subsidiary of Japanese banking giant MUFG Bank, in a transaction that would include transferring Standard Chartered's conventional credit card, personal loan, mortgage and auto loan portfolios.
However, neither bank is kissing goodbye to the country's retail banking sector.
Citi disbursed Rp 275 billion ($18.2 million) in ESG (environmental, social and governance) funds to multifinance firm Home Credit in December last year. Meanwhile, Standard Chartered channels loans through fintech companies Kredit Pintar and Kredivo.
