Indonesian digital banks forge partnerships with tech startups to onboard customers

A gojek driver in front of Bank Jago's logo

Indonesia’s digital banks are forging partnerships left, right, and centre to onboard more customers for their apps and gain market share, even as new players enter the sector.

While some are tying up with digital startups, others have embraced an online-to-offline (O2O) model by collaborating with the country’s largest retail chains.

The latest partnership, announced on Thursday, is between Bank Jago and Gojek, the ride-hailing and payments unicorn that merged with the marketplace Tokopedia in May to form GoTo. Post the merger, GoTo owns 21.4% in Bank Jago via its fintech subsidiary GoTo Financial (PT Dompet Karya Anak Bangsa). Gojek had increased its stake in Bank Jago to 22.16% in December, from 4.14% earlier.

The biggest shareholder in Bank Jago is Jerry Ng, the former CEO of Bank Tabungan Pensiun Negara (BTPN), who holds a 29.8% stake through his entity PT Metamorfosis Ekosistem Indonesia.

In the first phase of the partnership, Bank Jago’s app will be integrated as a payment method on the Gojek app. The feature will enable Bank Jago customers to debit cash directly from their bank account while making digital payments.

“It will bring about a new level of convenience and financial planning, enabling Jago customers to seamlessly pay for and track their spending on Gojek… This represents a step forward in our common goal to accelerate financial inclusion and literacy in Indonesia,” said Nila Marita, chief of corporate affairs, Gojek, in a statement to the media.

To date, Bank Jago has partnered with six digital players, including the Sequoia Capital India-backed wealth tech platform Bibit, to enable customers to open bank accounts and buy mutual fund products.

It has also partnered with several peer-to-peer (P2P) lending firms such as Akulaku, KreditPintar, Modal Rakyat, Akseleran, and the logistics platform Logisly.

Bank Jago also has plans for partnerships with travel sites, e-commerce retailers, and entertainment, investment, payment, and insurance platforms, its president director Kharim Indra Gupta Siregar had said in July.

More partnerships

In a similar vein, BCA Digital, owned by Indonesia’s largest private bank Bank Central Asia (BCA), announced a partnership with e-commerce platform BliBli on Thursday. Bank BCA and Blibli are part of the Djarum group. The partnership allows Blibli users to register their bank account with Bank BCA and make payments.

Lanny Budianti, CEO of BCA Digital said the lender will target millennials and financially literate users who are tech-savvy. It targets to attract hundreds of thousands of new customers by 2021.

Meanwhile, the sharia digital bank Bank Aladin Syariah Tbk and Indonesia’s largest retail chain PT Sumber Alfaria Trijaya Tbk (Alfamart) announced a partnership on July 7, under which Bank Aladin Syariah will acquire new customers from Alfamart outlets, which number more than 15,000 across Indonesia. Alfamart claims to serve more than 4 million customers every day.

Bank Aladin Syariah has also announced a partnership with the telemedicine app Halodoc.

DealStreetAsia had reported in April that Sea group and Alfamart are in talks to invest in Bank Aladin Syariah.

Going digital

Currently, many small banks are becoming digital banks in Indonesia.

The Indonesian Financial Services Authority (OJK) announced recently that seven banks are in the go-digital process, and that five other banks have been declared digital banks.

Moreover, Sea group owns Seabank Indonesia after it acquired Bank Kesejahteraan Ekonomi (Bank BKE) this year.

The consumer lending company Akulaku also holds a 24.98% stake in Bank Neo Commerce Tbk, while the sharia fintech ALAMI invested in an Islamic rural bank in March 2021.

Nailul Huda, a researcher at the Institute for Development of Economics and Finance (INDEF), said digital banks have more opportunities to acquire costumes by increasing their penetration in digital sectors, especially e-commerce.

“Around 60-70% of money in the digital sector is in e-commerce. Therefore, it will be interesting if they [digital banks] enter the e-commerce ecosystem. Besides, many users and merchants in ecommerce are underbanked,” Huda said. 

He sees several banks benefiting from the e-commerce ecosystem, including Bank Jago as part of the GoTo ecosystem, BCA Digital with BliBli, and Bank Aladin with Alfamart. Seabank is also expected to integrate with Shopee in the future.

Indonesia’s central bank Bank Indonesia (BI) projects that digital banking transactions (mobile banking and internet banking) will increase 19% year-on-year to reach Rp 32,206 trillion in 2021. Meanwhile, e-commerce transactions in 2021 will increase 33% year-on-year to reach Rp 337 trillion this year.

Perry Warjiyo, the governor of BI had said that digital banks will connect with fintech platforms through Open APIs (Application Programming Interfaces). “The standardisation of open API will be launched in August [2021]. It means digital banks will compete to get the largest volume, and give the best service.”

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.