Bank Central Asia’s 2016 performance highlights importance of mobile and digital transformation

Bank Central Asia’s digital transformation a success.

Betty Ho, analyst

BCA announced their 2016 results recently. The number of mobile banking transactions increased from 0.5 billion at the end of 2014 to 0.8 billion at the end of 2016 (CAGR of 26% year on year). Meanwhile, the transaction value increased from IDR 486 trillion (US$ 36.44 billion) to IDR 722 trillion (US$ 54.01 billion) (CAGR of 22%).

The number of Internet banking transactions also increased from 1.2 billion to 1.7 billion from 2014 to 2016 (CAGR of 19%). The value of transactions rose from IDR 5,350 trillion (US$ 400.23 billion) to IDR 6,801 trillion (US$ 508.78 billion) in the same time (CAGR of 13%).

The branch banking growth slowed. Transaction fell from 179 million to 170 million over the past three years. And the scale was also shrinking, from IDR 15,110 trillion (US$ 1.13 trillion) to IDR 14,611 trillion (US$ 1.09 trillion). Physical branching banking will likely continue to be disrupted by mobile and internet banking.

The operating environment for financial firms is rosy in Indonesia. Indonesia has kept rates low. This led to around 5% growth in the economy in every quarter since Q1 2014. Banks in Indonesia benefitted from lowered rate. In addition, tax amnesty plans also booted up Indonesia economy. It is likely that as loan books grow in size, BCA continues to explore digital channels to cross sell products in lending, payments and remittances.

BCA has solid digital and mobile banking presence in Indonesia

We can expect 300,000 Sakuku app (BCA’s application) users by the end of 2017, up from about 159,000 as of November 2016.

BCA is collaborating with e-commerce platforms such as Blibli, enabling users to buy products online via the Sakuku app, using their smartphones.

BCA also plans to collaborate with more merchants, especially in popular hangouts for young people such as the Central Park shopping mall in West Jakarta and the Pantai Indah Kapuk area in North Jakarta. At the moment, Sakuku has 276 merchants spanning 1,200 outlets across Indonesia.

BCA also recently announced US$15 million investments in fintech. The bank will invest in and collaborate with fintech companies that will support BCA’s financial service ecosystem.

BCA has also participated in the One Payment System where the four major banks, Bank Central Asia (BCA), Bank Negara Indonesia (BNI), Bank Mandiri, and Bank Rakyat Indonesia (BRI), signed the memorandum of understanding (MoU) of National Payment Gateway (NPG), which was initiated by BI (the Central Bank). Indonesians can expect lower fees related to payments and remittances and a more interoperable money movement environment.