Bullet point 1 Bullet point 2 Bullet pint 4 In this interview, Abdy D. Salimin, chief information officer (CIO) and the director of technology and operations at PermataBank, highlighted the opportunities in digital transformation, the challenges of being a BUKU IV bank, and the role of digital banking during the COVID-19 pandemic. He also discussed the bank’s profitability and how banks become frontliners that showed leadership resiliency. Salimin has held various important positions in his 30 years in the banking industry. He joined PermataBank in 2015 and introduced innovative banking products and services, and led the launch of the bank’s digital branch. In 2020, he was recognised as the Most Influential CIO by the iCIO Community. The bank’s digital banking serves all segments and leverages blockchain technology to drive its digital capability ahead of competitors. The demands for digital banking products and services have boosted the growth in digital transactions and revenues. Transaction volume increased by more than 200% year-on-year (YoY) to 937 million in the first half (H1) of 2021, driven mainly by the growth in all digital channels that increased by 351% YoY to 766 million. Net income increased by 74% YoY to $44.8 million in H1 2021. Total assets rose by 34.8% YoY to $14.9 billion. Its capital adequacy ratio stood at 35.4% and common equity tier 1 at 26.9%. “We implement capital resiliency. We will continue to preserve our capital position by growing prudently, practicing solid risk management and corporate governance,” Salimin said. PermataBank obtained its confirmation as a BUKU (Bank Umum Kegiatan Usaha—Commercial Bank Based on Business Activities) IV bank from the Financial Services Authority on 20 January 2021. It is one of the top 10 banking institutions in Indonesia with a core capital of more than $2.1 billion. PermataBank has 304 branch offices and has served nearly four million customers in 62 cities. In 2004, Standard Chartered Bank (StanChart) and PT Astra International acquired a controlling interest in PermataBank. In May 2020, Bangkok Bank became the controlling shareholder after taking over 89.12% of PermataBank’s shares from the total number of StanChart’s and Astra’s issued and paid-up shares. Salimin previously served as the head of global technology at StanChart, where he worked for 15 years. He rolled out an enterprise mobility platform for frontline, Retail Workbench, in Hong Kong, Singapore, Malaysia, Indonesia, India, Bangladesh, Pakistan, the UAE, Kenya, and Nigeria. He also worked at Citi for 11 years and held several positions in Singapore and Indonesia, including vice president mortgage product manager, from 2000 to 2001. The following key points were discussed: PermataBank faced tougher competition after obtaining BUKU IV status early this year It fast-tracked its digitisation, data security, and automation of middle and back office operations Net income went up by 74% YoY, which showed profitability and prudent management It helped maintain financial stability through its response to financial challenges and by providing services during the pandemic The following is the edited transcript of the interview: Foo Boon Ping (FBP): What is the one key opportunity and challenge that your bank faces in this age of digital innovation and disruption? Abdy D. Salimin (ADS): The banking of the future is already here and is looking tremendously different from just a couple of years ago driven by some progressive changes in technology and customer behaviour. Truly, the future of banking is digital. The pandemic has altered our lives from how we shop, how we learn, how we work, to even how we bank and created significant changes in customer behaviour. The pandemic has radically reshaped our social and economic landscape, accelerated demands of digital experiences, amplified the need for easy access to banking products and services. PermataBank faced tougher competition after obtaining BUKU IV status early this year ADS: Additional challenges as a BUKU IV universal bank, we are no longer competing just against peer banks but also with many financially rock-solid fintechs and dozens of neobanks backed by large digital/e-commerce platforms that have deep pockets and owned massive active customer base. Here in PermataBank we see these as opportunities. Demands for digital banking products and services have accelerated growth in our digital transaction volume and revenue, which we have never seen before. More than 95% of our transactions are now processed straight through. During H1 2021, our total transaction volume increased by more than 200% YoY to 937 million. The increase mainly comes from significant growth in all digital channels, which increased by 351% YoY to 766 million. A total of 7.6 million new accounts and loans were booked during the fiscal year 2020, of which 85% was from application programming interface (API) partnerships and mobile banking, as customers continue to shift from branch banking towards digital. Volume increases demonstrating our strong build and effective third-party partnership with top fintechs, large platforms and major ecosystem players in the digital economy. This is a new growth area with new revenue streams, which required a complete change in management mindset, change in business model from traditional branch network, relationship manager, direct sales-driven to new API and banking-as-a-service models. We started this journey just before the pandemic and we are seeing early successes. We will continue to invest in digital technologies that improve customer experience, build scale, deliver business growth, and increase productivity and efficiency. We are now the leader in digital banking with comprehensive offerings that serve all segments – retail, sharia, small and medium-sized enterprise (SME), commercial and wholesale. Our digital capabilities are best in-class including Permata API, mobile banking super app PermataMobile X, online banking PermataNet, online banking for businesses Permata-e-Business, Permata Digital Value Chain, Digital Trade Finance (with blockchain technology), artificial intelligence voice recognition call centre, digital model branches, cardless cash withdrawal at more than 20,000 locations nationwide, quick response (QR) pay and QR merchant acquiring. FBP: What are your views of digital transformation driving organisational and operational resilience during COVID-19? How has COVID-19 catalysed opportunities for digital transformation and how has it impacted your institution? It fast-tracked its digitisation, data security and automation of middle and back office operations ADS: COVID-19 is pushing banks over the technology edge and transforming our business at a pace never seen before. In just a few months, the crisis has brought about years of change in the way companies in all sectors do their business. The pandemic has radically changed our priorities, business model, the way we work, and ultimately how we serve our customers. No one has ever prepared and ready for this, but to survive, sustain and grow, we realised we have to adapt to changes immediately and effectively. During this challenging time, we continue to digitise our channels, increase spending on data security, automate middle and back office operations, which enabled us to work from home (WFH) (more than 70%), facilitated remote collaboration, built distributed operations (in more than 50 cities) for risk-diversification, supported an increase in customer demands for online purchases and services, and run 24-hour banking services in all digital channels. COVID-19 has accelerated our digital investments in many areas and increased customer digital adoption faster than we thought possible before the crisis. We now have digital platforms that offered our customers’ ability to do all their banking activities online in real time without ever visiting our branches. These include know your customer (KYC) process, open account, get loans, credit cards and mortgages, conduct investment-risk assessment, buy/sell mutual funds and bonds, buy bancassurance, make transfer, bill payment and top-up, send greetings with
