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Jakarta Post

Banks face human resource challenge amid digital development

  • Yunindita Prasidya

    The Jakarta Post

Jakarta   /   Mon, July 27, 2020   /   04:08 pm
Banks face human resource challenge amid digital development A click away: Thanks to mobile banking applications, ‘round the clock transactions are at the customer’s fingertips. (Philippine Daily Inquirer/-)

Indonesian banks face challenges with human resources as they strive to bolster digital banking during the global health crisis.

Private lender Bank Central Asia (BCA) president director Jahja Setiaatmadja cited human resources as part of the company's obstacles in digitizing the banking process.

“In this new banking future, we know that the cost is enormous: the cost to set up a data center, then recruit competent people in that field, educate [our employees],” Jahja said during a CNBC Indonesia webinar called The Future of Digital Banking on July 23.

BCA, the largest private bank in Indonesia, recorded a 91 percent annual rise in the number of mobile banking transactions to 1.29 billion during the year’s first quarter, while the number of internet banking transactions increased by 24 percent year-on-year (yoy) to 740 million, company data show.

The total value of the transactions reached a staggering Rp 3.38 quadrillion (US$231.9 billion), or more than 45 percent of the bank’s total transactions, almost matching the Rp 3.5 quadrillion transacted at the banks’ branches.

Consumers have turned to digital banking to avoid COVID-19 virus transmission through face-to-face transaction.

Consumers’ appetite for digital banking has also grown over the years. A 2019 McKinsey & Company report found that Indonesian consumers were very open to digital banking, with 55 percent of nondigital customers saying they were likely to use digital banking in the next six months, the second-highest figure among emerging Asian countries.

Meanwhile, according to a 2018 PricewaterhouseCoopers survey on digital banking in Indonesia, 66 percent of the surveyed banks say they have developed a digital strategy as part of their corporate strategy. 

BCA concluded its acquisition of Bank Royal Indonesia last year for Rp 1.01 trillion in an effort to expand its digital banking business. The acquired bank is projected to become BCA’s digital bank.

Jahja also noted that, amid the digital channel development, banks had to improve on security and legal aspects as well as compliance.

The banking industry considers cybersecurity its biggest risk over the next two to three years, according to the 2018 PricewaterhouseCoopers survey.

Bank Rakyat Indonesia (BRI) president director Sunarso echoed Jahja’s sentiment, stating that the human capital to assist the digital transformation was among the biggest challenges banks were facing. In addition, banks also needed to compete with fintech platforms to hire them. 

“We can invest in the infrastructure [for digital transformation], but the culture and behavior within a digital era is not something that we can buy, because there is no factory for that,” Sunarso of BRI said, in elaborating on the need of a shift in mindset among employees to support the future of digital banking. 

The company recently launched a platform to digitize offline market transactions, especially for micro, small and medium enterprises (MSMEs), dubbed Web Pasar (Market Web). The bank claimed to have helped digitize more than 4,200 traditional markets with more than 45,000 merchants registered and aims to add another 5,200 markets on its platform this year.

The Financial Services Authority’s (OJK) commissioner for banking supervision, Heru Kristiyana, said the authority was preparing the regulatory infrastructure to support the establishment of a conducive environment to assist the digital transformation of banking services. 

“The most important thing is for banks to strengthen their capital, because without doing so, they will not be able to develop their digital banking, and if they are not able to develop digital banking, they will definitely be abandoned by their customers,” Heru said.