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OCBC banks on mobile-first strategy, partnerships to grow Indonesia market share

OCBC Bank is ramping up its digitalisation efforts in Indonesia in a bid to capture a larger share of the market.

It will use a mobile-first strategy and collaborations with partners from various sectors to increase accessibility to their services and deepen customer engagement, said OCBC in response to queries from The Business Times.

According to OCBC NISP - the bank’s Indonesia arm - Indonesia has a mobile penetration rate of 125 per cent, and 67 million out of 255 million people in the country use their devices to access the Internet.

“Indonesia represents the highest potential for us,” said chief executive Samuel Tsien, at the bank’s Investor Day held on Monday. “We are the ninth largest bank in Indonesia in terms of assets and profits and loans, but our market share is still relatively small.”

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OCBC has over 310 branches in Indonesia, with a reach covering four major cities and other smaller ones.

At a media briefing in Jakarta on Wednesday, the digital transformation team in Indonesia shared that it has already seen a 40 per cent year-on year increase in transactions on its mobile banking app, ONe Mobile. Fee income via transactions on the app has also jumped by 46 per cent.

Meanwhile, retail time deposits opened through digital channels grew eight times faster than that of traditional banking channels.

Going forward, OCBC NISP is targeting to make up to 90 per cent of its existing branch functionalities available on ONe Mobile.

The bank is keen on creating digital products and services beyond traditional banking. It will do so by working with non-bank partners and fintech firms.

"The presence of startups that work quickly in creating innovations and creative thinking are the drivers of business transformation in the Indonesian banking sector,” said Altona Widjaja, OCBC NISP Bank’s head of new digital ventures.

“Therefore, collaborations with startups are expected to support OCBC NISP Bank's efforts to be a part of our customers' daily lives.”

The bank is exploring partnerships in vertical startup industries such as education, housing, health and B2B (business-to-business) services.

As OCBC forges ahead with digitalisation, it has set targets beyond Indonesia. 

As a whole, the group is aiming to reach a steady state cost-to-income ratio of about 40 per cent, up from the current ratio of 43 per cent, said Mr Tsien. He believes that such a steady state will emerge within the next five years, as investments into digital transformation continue to yield cost savings and incremental earnings.

The group’s digitalisation efforts to date have seen a tripling in sales leads conversion from 2012 to 2017. As at the first half of 2018, 87 per cent of financial transactions and 70 per cent of remittances are done digitally.

Digital customers, defined by OCBC as those who have used Internet or mobile banking at least once in three months, now rake in higher revenues compared to non-digital ones - two times more for the consumer segment, and three times more for the SME (small and medium-sized enterprises) segment.

Today, 48 per cent and 60 per cent of OCBC’s consumer and SME customers respectively are digital customers.

The group is targeting to push this proportion up to 60 per cent and 70 per cent respectively at steady state, across all core markets.

Key strategies include leveraging artificial intelligence and data analytics to strengthen customer relationships and drive scalability. OCBC also aims to have 85 per cent of applications on the cloud by 2023, up from 35 per cent in 2018.