JAKARTA – March 9, 2021 – In the current vaccination era, the Indonesian economy continues to be favoured due to the demographic bonus and the rapid adoption of the digital economy. Investments in technology and other supporting sectors such as e-commerce, telecommunications, and logistics have increased rapidly since the pandemic era, providing momentum for the financial and banking industry, in particular, to take opportunities amid changes in consumer behaviour in Indonesia.
This was the discussion that emerged at the PT Bank HSBC Indonesia Roundtable Discussion with macroeconomic and banking media partners organized by the Indonesia Economic Forum on Tuesday, March 9, 2021, through the Zoom Meeting. The discussion entitled “Investment and Banking Trends in the Post Vaccination Era” presented several speakers such as Eri Budiono, Director of Commercial Banking of PT Bank HSBC Indonesia, and Edhi Tjahja Negara, Director of Wealth & Personal Banking of PT Bank HSBC Indonesia, moderated by Shoeb Kagda, Founder & CEO of the Indonesia Economic Forum. Also attending Alina Pranoto, VP Communications of PT Bank HSBC Indonesia, and dozens of journalists from various national media.
Eri Budiono, Director of Commercial Banking of PT Bank HSBC Indonesia, said that from the side of positive sentiment, the vaccination program currently running by the government is considered to provide momentum for economic growth. Especially if the Indonesian government can reach a vaccination rate of up to 700,000 per day, of course with the help of various parties such as the private sector (through the Gotong Royong Vaccination Program), which in turn will encourage pent up demand (an increase in demand rapidly because it is no longer unbearable) as it happens in England where the British government has vaccinated more than a quarter of the population.
“Another factor is the trend of the digital economy. We see that apart from digital banking, other sectors such as e-commerce, logistics, telecommunications, tower companies, and warehouse logistics will grow. It is interesting that this e-commerce sector, considering that our users have reportedly already exceeded the population. And also with the existence of financial inclusion (smart behaviour) provides opportunities for SMEs. The government is eager to bring these SMEs to global platforms such as in Korea, China, India. We, as a bank that has an international network, also continue to see this opportunity and we are eager to bring SMEs to a global platform, of course, there are many things we can help, starting from how they handle disputes, designing their virtual stores well, “he said.
He added that the trend of digital banking, especially in the corporate banking segment, has increased rapidly since the pandemic. In the future, banks will compete to serve their clients digitally. And for this, HSBC itself is ready to implement remote working, flexible hours, and even mom’s hours. Services through digital channels will continue to be strengthened in line with the decreasing trend of brick and mortar services (branch offices). HSBC sees that the cost to serve will be much lower via digital channels. In terms of speed to process and the potential to minimize fraud is even better. Banks in this case need to invest to have a system that is resilient and not easily penetrated by hackers.
“From the digital investment side, there are two main points. First, we have invested a lot and will continue to do so in the future. That’s why our WFH ratio is very high in the industry, at the head office it is already above 90%, this is just from the back-end side. On the front-end side, in the future, how we serve our customers, of course, must continue to be developed. Not only in terms of being able to do transactions via mobile or remotely, but other features such as customers who want to check their LC, to what extent we can tie the tracking system, we also provide direct payment facilities to many suppliers, FX transactions, open LC, send or transfer money and so on, “added Eri.
Edhi Tjahja Negara, Director of Wealth & Personal Banking of PT Bank HSBC Indonesia, added that Indonesia’s digital economy is very attractive to investors. In terms of population demographics itself, Indonesia’s position compared to other ASEAN countries such as Singapore, Thailand, and Vietnam is different, where Indonesia has a demographic bonus which, if managed properly in the next 5 to 10 years, will become an engine of economic growth in the future.
From an internal study entitled Insight Customer 2050, it was found that there will be significant growth from low income to middle income and upper class. It is estimated that there will be more than 120 million Indonesians who will graduate from 2021 to 2050. This means that the wealth management segment will be prospective.
Another potential, there is a change in customer spending behaviour, which is usually offline to online. On the one hand, leisure spending such as traveling, vacations, and hotel stays fell significantly. Also, the faster adoption of technology by all levels of society, which was originally predicted to occur in 2025, has happened today.
“We must anticipate all these potentials when the situation is normal, how will we be prepared for the new trend needs. Now people talk about wealth, but not only about the financial side but also about health-related ones. The landscape has changed. We also need to anticipate how we can make it easier for consumers to trade transactions. The digital journey is important for every institution. The attractiveness of technology adoption for the elderly in Indonesia is increasing. They are used to zooming in. This means that their transaction patterns and financial needs have changed (because they barely leave the house), which of course will be served more by digital channels in the future, “said Edhi.
Digital banking at HSBC itself includes two aspects, the digital banking side for customer daily transactions and also related to the digitization of all wealth management sales processes. Considering that currently, more and more people are thinking about their financial planning, financial needs, financial goals, and risk profile, like it or not all of this must be served through digital channels. That’s why digital banking will be HSBC’s focus and strength.
“There is a large part of the spending that is not done, which of course these funds are moved to saving and investment. Therefore, we need to provide financial advisory to the Indonesian people, giving them the right and right choice. This is our focus and we continue to ride with momentum, “added Edhi.
Related industries such as fintech, P2P, insurance, other financial market products will also continue to grow together with banks, especially in the wealth management segment. The latest trend shows that P2P lending, fintech, and digital insurance players in the capital market continued to increase during the pandemic, although the momentum for growth may only be seen in the post-pandemic era considering that currently, they are still adjusting to new normal conditions.
“So the millennial segment has great potential. Today HSBC is also refining our proposition and continuing to explore digital services that meet their aspirations. For example, they like something that is not limited, we will consider the transfer feature many times. We always use Key Opinion Leader (KOL) in our communications and get closer to them and carry out regular studies every year to explore new emerging trends. Our last trend, millennials want 3 things: prepare education for their children, own their own homes, and have their own businesses. From there we will prepare services and products that roughly match their aspirations, “said Edhi.