Q and A With Akira Murayama

According to the 2021 McKinsey Personal Financial Services survey based on 20,000 urban banked respondents across 15 Asia–Pacific markets, digital adoption in emerging markets is on par with that in developed markets.

We asked Akira Murayama, Managing Director, ABeam Consulting Indonesia, to share his views on digital adoption in Indonesia.

1. What is your view on the pace of digital adoption in Indonesian banks?

ABeam thinks Indonesia leads the world in terms of digital adoption. Considering Indonesian geographical conditions, demographics, and the needs of the society, it is inevitable to ‘go digital’.

Key drivers include:

  • Geography: Indonesia is the largest archipelago in the world, comprising more than 18,000 islands and stretching 5,110 km from east to west, leading to huge costs for banks to maintain a physical services infrastructure, including comprehensive branch networks and ATMs across the country.
  • Demographics: A sizable population, including the Gen-Y and Gen-X, are familiar with digital services and devices.
  • Digital customers: The account holding rate of digital banking in Indonesia is second to Brazil (24.9%), and it may reach close to 40% by 2026, based on an article by Finder.

Considering a breakthrough by super apps such as Gojek as well as the valuation of Bank Jago and Jenius in the stock market, ABeam expects further progress in digital adoption in Indonesia. The company feels that financial sectors should continue investing in digitalization for better customer journeys, customer experiences, operation excellence, and business agility.

2. What are the challenges you foresee on the road to adoption?

It is important to build societies wherein the people who are not good at using digital platforms are not left behind nor isolated. Financial sectors will pursue digital experiences (DX), but it is also necessary to reach out to the non-digital people. Certain companies may also need to optimize face-to-face communication or close customer relationships through DX solutions.

Another challenge would be to reach the unbanked people (those who do not have a bank account) who comprise 51% of the total population (over the age of 15) currently, by leveraging the significant ratio of mobile users (133% / 355 million) and tap into this huge opportunity.

3. What digitization initiatives are you most excited about?

I am excited about new services and topics through digital banks and their fintech services, such as banking-as-a-service, global trade, and BNPL (Buy Now Pay Later) to stimulate the great buying power and its potential. Major themes of digital banks will be:

  • Open API to connect outside services
  • Data management for operational optimization
  • Regulatory compliance and cybersecurity measures

These themes are deeply and mutually associated, and digital banks will grab the market share in Indonesia since customers prefer to use digital banks because of the ease of use of various services as compared to existing banking services.

How well digitization aligns with the Indonesian business landscape and their way of life will determine the market share of the Indonesian banking sector going forward.