Developing mobile banking technologies in Indonesia CLIENT PROFILE Bank Sinar Harapan Bali, part of Bank Mandiri Group, is a micro-finance bank and is the primary provider of mobile banking services to clients. Through Its network of 93 branches across Bali, Bank Sinar has implemented a mobile banking platform in conjunction with an Mobile Network Operator (MNO). The bank offers a mobile wallet for clients to store money and use the mobile channel to make payments and transfers to linked accounts. As of August 2014, Bank Sinar's portfolio consisted of over 80 percent micro and small loans. In December 2014, Bank Sinar issued 800 million new shares and was renamed Bank Mantap. With the establishment of ajoint venture between Bank Mandiri, state pension fund Taspen and state-owned postal service Pos, Bank Mantap aims to expand its pension lending business in Indonesia. Bank Mantap continues to serve the small and medium-sized enterprises (SME) sector and disbursed $200 million in loans in 2017, an increase of 161 percent within one year. The remainder of the portfolio is focused on pension lending. BACKGROUND IFC's support to Bank Sinar was to help ensure the success of Sinar Sip and support expanding access to inancial Out of a population of 252 million, more than 28 million p pp pa g fi Indonesians still live below the poverty line. As of 2017, only services for the unbanked. Specifically, IFC would assist by: 49 percent of adults in Indonesia had an account at a financial * Identifying and prioritizing necessary enhancements institution. While Indonesia has made enormous gains in to the business model, services and operations of Sinar poverty reduction, approximately 40 percent of the population Sip. remains vulnerable, as their incomes hover marginally above * Supporting Bank Sinar in the development of a third- the national poverty line. Promoting access to finance for this party agent networ. segment can help. * Providing strategic advice, guidance on investments for IFC ROLE management to deliberate on and agree next steps. In November 2011, with support from IFC and GSMA, Bank . Adjusting and managing expectations of key AXIS. .stakeholders regarding the outcomes that Sinar Sip Sinar had partnered with AXIS to introduce Sinar Sip, a g g branchless banking savings product. Sinar Sip was launched can realistically achieve and their significance for the and marketed to target untapped market segments, develop broader interests of financial sector development in customer loyalty and longevity, support partner growth, and Indonesia. increase access to banking for Indonesia's unbanked. The Sinar Sip is designed to integrate with existing Bank Sinar new service would demonstrate to the Central Bank, Bank deposit and lending products, including loan payments and Indonesia, that the mobile banking product is safe and secure. transfer of funds to the Sinar Sip wallet. FIInternationaI Fnance Corp oration WORLDBANKGROUP Creating Markets, Creating Opportunities IMPACTAND RESULTS DIGITAL FINANCIAL From 2005 to 2014, Bank Sinar's total assets reached $110 million and total loan SERVICES IN IFC portfolio reached $78 million. This project has not only helped launch a new product, but enabled Sinar to transform the way it conducts business. There is tigital F inancial Sveo i,us a shift from assisted transactions for loan payments, to customer self-service. te g t proid acces to Other benefits include: branch-based banking. Technology-enabled * Providing a wallet for existing customers to store money, make payments financiallservicesnenablelcustomersrand and transfers through the convenience of mobile channels rotid us toolssch as mobil pe, providers using tools such as mobile phones, * Enabling integration into the formal banking system by creating credit payment cards, and online banking. records and targeting new customers who may not have had access to bank accounts previously Goal,oe ilo epe-aot4 percent of the world's adult population * Stimulating economic activity and SME development by reducing - are excluded from financial services. transaction costs IFC's experience has shown that DFS can dramatically narrow the financial inclusion gap in emerging economies, making it an KEY FACTS 9Bali, Indonesia $ BankSinar important tool for reducing poverty. 115,395 1,955 us 1,045 93 USD m In support of the World Bank Groups Total Clients Average Loan Branches Loan Portfolio itment to universal access to finance, ..FC is working with its network of partner strategy to achieve this go Source: IFC KEY LESSONS For more inarmation abou IFC lobal DS IFC's experience in the Indonesian market and with Bank Sinar Harapan and AXIS has provided valuable insights for developing mobile banking technologies in Indonesia and elsewhere. * Mobile Banking is a new concept for most Balinese people. Efforts towards customer education are needed for users to avail of the full benefit of the Sinar Sip offer. * In the absence of an agent network, Bank Sinar had to rely heavily on outsourced resources and branches to acquire customers to achieve the target of 69k registrations within 12 months. * Bank Sinar is the first bank to target this market segment with a mobile baning offering. It is opening a market that several other banks are considering venturing into. * Sinar Sip was relaunching by developing a model to allow cross-selling of Sinar products. * Implementation depends on regulatory framework. Uncertain regulations around agent banking and the role of super agents meant that Bank Sinar could not use existing eMoney regulation as wallets would be linked to core banking accounts. (what was done instead?) * Sinar Sip adopted bank-led models to serve customers considering e-saving required radical customer behavior changes unlikely without customer education and proper incentives to compensate agent services. FInternationaI nance Corp oration WORLDIBANKGROUP Creating Markets, Creating Opportunities