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rivate lender PT Commonwealth Bank Indonesia, part of the Commonwealth Bank Australia Group, aims to attract more small and medium enterprises (SMEs) by introducing a smartphone application.

'€œCashflow'€, a free tool specifically designed to help SME entrepreneurs and professionals manage their businesses through smartphones, was part of the bank'€™s efforts to strengthen its focus on the middle segment, Commonwealth Bank Indonesia president director Tony Costa said.

'€œWe are the first bank to issue a smartphone app for SMEs that combines bookkeeping and banking. It will help SME entrepreneurs and professionals manage their day-to-day financials,'€ he said.

Donny Prasetya, executive vice president for e-channel and digital business at Commonwealth Bank Indonesia, said the app offered rich features that allowed its users to easily record financial transactions, as well as keep tabs on payments and collection schedules through a reminder feature.

The app also provided a service for its users to make real-time payments or transfers up to Rp 100 million per day (US$8,230.4) to any bank in Indonesia for free, Donny said.

According to Donny, the Cashflow app was developed using a Human Centric Design (HCD) process that allowed the bank'€™s digital team to really understand the customers'€™ needs in the SME segment, which accounts for around 90 percent of Indonesia'€™s business.

Since September this year, the application had been downloaded and used by over 7,000 Android mobile phone users. The bank was also preparing an app for iOS users to be launched early next year,
Donny said.

'€œWe hope there will be at least 25,000 users at the end of next year. Of course, we hope a significant number from the target will consider becoming our customer,'€ he added.

The bank posted 20 percent growth in SME loans to Rp 4.8 trillion in the first nine-month period of this year, compared to Rp 4 trillion at the end of last year, according to its financial report, as mentioned by Rian E. Kaslan, executive vice president and head of wealth management and business strategy at Commonwealth Bank Indonesia.

Total SME loans had nearly reached the bank'€™s target of Rp 5.1 trillion by year'€™s end, she added.

Rian said the SME loans contributed about 17.8 percent to the bank'€™s total nine-month period loans, worth Rp 14.85 trillion, which had grown 20.43 percent from Rp 12.33 trillion year-on-year (y-o-y).

The SME loans also contributed to the bank'€™s Rp 72.3 trillion total productive lending, with a year-end target of Rp 74 trillion.

'€œWe categorize SME loans as loans under Rp 20 billion; total customers in this segment have reached 3,100 as of June this year,'€ she said.

Rian said loan growth was expected to improve in the second half of next year as the domestic banking industry was experiencing slower lending growth, at 13.16 percent y-o-y, in the third quarter of this year, compared to 17.2 percent y-o-y in the second quarter of this year.

Slower lending has affected the bank'€™s net interest margin this year, declining to 4.47 percent as of the end of September from 4.75 percent in the same period last year, even though the compression was lighter compared to the industry level, she said.

By the end of September this year, Commonwealth Bank Indonesia had posted a 14.02 percent loss at
Rp 136.65 billion compared to Rp 155.82 billion in the same period last year.