Saturday, 27 November 2021

Bank Danamon’s Itagaki: “We are stronger because of MUFG”

5 min read

Interviewed By Foo Boon Ping

In this Leadership Perspective series, Yasushi Itagaki, president director at Bank Danamon Indonesia, discussed the digital transformation and synergy with MUFG which helped the bank expand its lending and customer base. He prioritised the delivery of digital services to customers, enhanced the protection of staff and support to the community amid the pandemic.

Yasushi Itagaki joined Bank Danamon as director in March 2018 and was appointed as president director on 1 October 2019. As chief executive, he oversees the bank's overall business in consumer and small and medium-sized enterprise (SME), enterprise, micro and sharia banking, as well as global collaboration, transaction banking, treasury and capital market, and branch network.

He led the bank to achieve an 18% growth in net profit to IDR 998 billion ($69 million) in the first half of 2021, compared with IDR 845 billion ($59 million) in the same period the year before. The increase was largely driven by the 11% year-on-year growth in loans from the enterprise banking segment consisting of corporate and commercial banking clients, as well as financial institutions. Bank Danamon also posted 10% growth in current and savings accounts, which showed its continuing sound funding structure.

The bank strengthened its collaborations with MUFG and the synergy led to the growth in customer franchise. It innovated the products to provide seamless services to the value chain ecosystem. The collaboration resulted in a 73% loan growth in enterprise banking segment.

Itagaki previously worked at MUFG Bank as managing executive officer and deputy chief executive of the global commercial banking business unit. He was also the executive officer at MUFG. Prior to these positions, Itagaki was the general manager of the global planning division responsible for the bank’s international expansion. Itagaki was based in Singapore from 2013 to 2015 when he set up regional headquarters for Asia and Oceania. He assisted the regional CEO in developing and executing key strategic initiatives for the region.

Notable contributions throughout his career at MUFG include the development of the bank’s business platform, where he strategised the Southeast Asia commercial banking network.

When he was the chief manager of the global planning division at MUFG, Itagaki was involved in the privatisation of Union Bank of California and led the execution process of MUFG’s strategic investment in Morgan Stanley during the global financial crisis.

The following key points were discussed:

  • Leveraging MUFG networks to expand its lending and develop partnerships with startups
  • Investing in digital services to better serve customers
  • Meeting financial needs of SMEs and emerging affluent segment

 

 

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?

Yasushi Itagaki (YI): The pace of change in the digital age has become exponential and is disrupting even to large companies. According to Harvard Business Review article, more than half of Fortune 500 companies have gone bankrupt, been acquired, or shuttered due to digital disruption. The COVID-19 pandemic has only accelerated shifts. Reshaping business to accommodate the new virtual realities overtaking the globe will be necessary to endure throughout this ongoing progression.

One key opportunity is innovation of digital technology and people’s development. Our strategic priorities for the rest of the year and beyond are to further expand our business, build a solid foundation through digital initiatives, human capital and branding, as well as leveraging collaboration with MUFG.

Leverage MUFG networks to expand lending and partnerships with startups

YI: We are leveraging MUFG’s global network and our strengths in the local market to prudently expand lending across ecosystems. This includes financial supply chains where Bank Danamon provides funding and lending solutions to the suppliers and distributors of MUFG customers as anchors in the ecosystem. If done right, we will provide one of the best solutions for our customers, as well as global expertise coupled with local networks and relationships.

Bank Danamon continues to serve individuals with a segment-based approach to tailor to our customer’s financial needs across lifecycles. We recently launched Bank Danamon Optimal, a comprehensive financial solution that caters to the emerging affluent segment.

Bank Danamon continues to innovate on digital, through feature enhancements of our mobile banking app, D-Bank Pro, equipping our relationship managers with technology to serve our customers better, as well as building partnerships with various fintech companies and digital players. Bank Danamon can leverage investments made by MUFG and MUFG Innovation Partners to develop stronger partnerships with startups.

FBP:What are your views on 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?

YI: The COVID-19 pandemic presented us with a difficult challenge that limits business activities and demands due to restricted mobility. However, this presented opportunities for us to encourage our customers to use our digital banking channels such as mobile banking app with a video registration feature so customers do not need to go to our branches to open an account. Moving forward, this trend will motivate us to continue to innovate in providing digital solutions to our customers. 

With the pandemic, digital transformation is not an option anymore, but it’s a must. Very fortunately Bank Danamon started its digital transformation journey in 2014 with the launch of our first mobile banking app. When the pandemic hit us, although we were in shock, we were able to adapt rapidly – taking care of our employees, serving our customers, supporting our communities better.

Invest in digital services to better serve customers

YI: As we navigate through this unprecedented situation, we are even more excited to invest and innovate  our digital capabilities to meet our customers better, serve wider communities/ecosystems, and most importantly to become a better place to work for our employees.

Digital banking service is increasingly becoming an integral part of any bank in Indonesia. Not only does it give convenience to customers, it also supports financial inclusion, providing access to Indonesians who previously had no access to these banking services.

Currently, Bank Danamon has robust digital banking services, including mobile banking, internet banking, and SMS banking. Bank Danamon’s mobile banking was one of the first in Indonesia to have a face-to-face verification process to open an account through video calls entirely within a single app. We are continuously developing our digital capabilities. Today, our digital transaction services have reached 80.5% since the pandemic.

Bank Danamon can strengthen its digital capabilities by leveraging MUFG’s digital innovation centres in Silicon Valley, New York, London, and Singapore, as well as MUFG Innovation Partners in Tokyo.

FBP: With so much uncertainty in 2021, how will your bank remain resilient? How do you plan to support your customers, employees, and the community to be resilient?

YI: We have also supported our employees to grow and develop through the founding of Bank Danamon Corporate University as the learning centre for employees to encourage business growth and develop new talents with the highest quality for the company by implementing our corporate value of BISA, which stands for berkolaborasi (collaboration), integritas (integrity), sigap melayani (customer-centric), dan adaptif (adaptive).

During the pandemic, we did not neglect our customers, partners, and the communities around us. Bank Danamon focused on three important pillars: to protect the health and safety of our employees, to provide solid services and solutions for our customers, and to manage the sustainability of our business for the Indonesian people as well as our shareholders. 

Bank Danamon has implemented safety pandemic policies to protect its employees such as initiating work from home, safety and health protocols that include wearing of masks, physical distancing, maintaining proper hygiene, taking daily surveys to monitor the health of its employees, providing free polymerase chain reaction tests to employees who are suspected to have been infected, and performing strict contact tracing for identified positive cases.

We actively encourage our customers to use our mobile banking D-Bank Pro and internet banking services to reduce transactions in branch offices. Protecting our customers’ information is one of the critical aspects we put attention on by improving the technical security measure around mobile banking and internet banking services, as well as increasing personal customers’ awareness via educational messages in various media. We have also implemented new transactional policies to support digital transactions such as email for non-internet banking users.

At the start of 2021, MUFG and Bank Danamon held two important events as part of their continuous collaborative commitment to provide valuable and high-quality services to customers. The first event was The Indonesia 2021 Summit, a one-day thought leadership event for the customers of both banks that was attended by over 1,100 participants and held virtually. The second was Business Matching Fair, a virtual networking platform that was held for three days that connected Indonesian corporations with MUFG customer networks in Japan and Southeast Asia. It was attended by over 120 corporations from Indonesia, Thailand, Philippines, Vietnam, and Myanmar. It also represented various industries including fast moving consumer goods (FMCG), healthcare, food and beverages (F&B), cosmetics, health products, and household goods.

During the pandemic, Bank Danamon launched a series of activities to support Indonesians, such as the "Positivity Saves Lives" campaign. It invites the public to share videos with relatives to spread positive spirit. For every video shared, Bank Danamon donates one personal protective equipment (PPE) to hospitals and health facilities throughout Indonesia, which was distributed by Indonesia Strong, an NGO supported by the Indonesian Doctors Association. The total donation is more than 11,000 PPE.

Bank Danamon held a series of corporate social responsibility activities during the pandemic such as donating aid of  JPY 100 million  ($978,525) to Indonesian students in Japan through the Indonesian embassy in Tokyo to help them through financial hardships during COVID-19; cash donation of over IDR 1 billion ($69,938) to help with the economic difficulties. Banks donated food supplies to drivers of Grab and Gojek. It donated 4,000 PPEs to healthcare workers fighting in the frontlines. It has donated life insurance and accident insurance managed by BP Jamsostek to 10,000 volunteers under the coordination of National Board for Disaster Management (BNPB). The bank conducted food and PPE distribution in a number of areas in Indonesia through our network of area offices and branches, and organised t-shirt donations for volunteers in Wisma Atlet Hospital.

On 23 June 2021, we also held the “Vaccination Central” in collaboration with MUFG and Adira Finance. We distributed 12,500 doses of vaccine targeting people in micro, small and medium enterprises, transportation communities, online transportation drivers, and vulnerable communities and frontline employees dealing directly with clients of the three financial institutions. This event was fully supported by the Indonesian Ministry of Health, DKI Jakarta Provincial Government through the Department of Health, Department of Labour, Ministry of Transmigration and Energy, Department of Transportation for DKI Jakarta Province, as well as Mayapada Hospital, and Halodoc as operational facilitator and vaccination appointment management.

In August, we held vaccination for market traders in three cities, Senen market, Jakarta, Bandung Juara market, Bandung, and Sleman market, Yogyakarta. The aim is to support regional economic growth in times of pandemic and accelerate community immunity especially in the market communities.

FBP:In the span of a year, the competitive landscape in banking has changed. Several of the confident challengers from this time last year have struggled or been acquired. What insights into resilience for banks and banking can we gain from this?

YI: In a very competitive industry, improving customer experience is key to stand out among others. Innovation is the key in attracting consumers’ attention. To jump ahead of the competition means investing in ground-breaking technologies, taking risks but within the parameter of the prevailing regulations.

Bank Danamon became one of the first banks in Indonesia to launch a feature that allows customers to open an account through a mobile application, without the need to go to branches. This is possible due to a know your customer process through video calls within the app and close coordination with the relevant regulators.

As part of MUFG, we are committed to continuously support and play a role in Indonesia’s economic growth. Collaborating with fintechs can also provide better experience for customers. Fintechs can go to areas where banks cannot go, while banks provide the strength and resources they need.

Due to its flexibility, services from fintech can be accessed anywhere and do not require lengthy verification process commonly done by conventional banks. However, fintechs typically do not have the funding, resources, and risk management practices that banks have. This is where banks and fintech can complement each other for the benefit of customers.

Meet financial needs of SMEs and emerging affluent segment

YI: Bank Danamon partnered with Investree, a leading peer-to-peer lender. Bank Danamon provides loan channelling to SME customers through Investree. The funding and risk assessment are provided by the bank while the interface and access are given by Investree.  

Bank Danamon continues to become stronger, following its induction as a member of MUFG, a global financial group. The bank was also confirmed as part of top-tier banks, according to Indonesian Financial Services Authority.

Our collaboration with MUFG has also presented us with many opportunities, especially in fostering relationships with large corporates and in forming partnerships with renowned institutions. These collaborations could only happen because of our capabilities in serving customers in every segment of the business ecosystem, from big global corporations to distributors, local suppliers, and consumers in general.

At the beginning of the year, through collaboration with MUFG, we managed to hold virtual events, such as the Indonesia 2021 Summit and Business Matching. Both events surpassed our expectations, in the number of participants as well as appreciations from the customers. These events support our corporate and SME business expansion, by providing transaction banking, foreign exchange and sharia solutions. Around 73% of loan growth in enterprise banking segment in the past year came from MUFG collaboration.

We have been very active. The Bank Danamon Optimal caters to the consumer banking emerging affluent segment and the most recent is the launch of our D-Bank PRO. Our asset quality has improved over time due to better risk management approach and implementation.

It is particularly important for us to grow together with our stakeholders and I have made various visits and events across Indonesia to build strong and healthy connections. With the current pandemic, most of these activities are continued virtually, but when the situation allows, I will continue to do face-to-face visits as much as possible.

FBP:Tell us your personal story. How were you in your younger years or early days of your career? Did you always want to work in a bank?  How did you rise up the ranks to be the CEO of the bank?

YI: I was full of curiosity when I was young and eager to explore the world and go abroad. Fortunately, I was placed in different countries with different assignments.

Among the various assignments, I found the assignment of cross-border merger and acquisition (M&A) advisory role, which continued for 10 years, in Tokyo, New York and London, as critical in shaping my career.

This experience helped me broaden my perspective on how to connect people from different backgrounds, as M&A is a marriage of different corporate cultures.

Later, I was assigned to develop an international strategy for MUFG. In a sense, my customer was changed from being an external customer to employer, MUFG. I was based in Singapore from 2013 to 2015 when we relocated regional headquarters for Asia and Oceania from Tokyo to Singapore. I returned to Tokyo as head of the Global Strategy Office in 2015, then in 2017 promoted to managing executive officer and deputy chief executive of the global commercial banking business unit of MUFG Bank.

The relocation of Asia and Oceania headquarters to Singapore, hub city in Southeast Asia, brought many benefits to MUFG in forming partnerships with local banks, such as Krungsri, Security Bank, VietinBank, and finally Bank Danamon.

Back in 1985, a very long time ago, I was a student in Kyoto City. Kyoto City then formed a sister city relationship with Yogyakarta. The Young Youth Goodwill Mission was formed and I became a member of the youth mission. Being a member allowed me to visit Yogyakarta, Jakarta and Bali for a week-long cultural exchange. Indonesia was the first foreign country I visited in my life. Now, out of more than 50 countries that I have visited, the most impactful and meaningful to me is Indonesia. Over the last 30 years, I always dreamt of working in Indonesia and now the dream has come true when I joined Bank Danamon.

To be a leader, what I learned from my mentor is we must manage three ingredients: ego, pride and greed. Everyone including myself has the three ingredients to some extent, but if they are excessive, they will ruin our life, especially in the leadership position. A leader is probably better to be humble and a good listener, so we can engage people well. Despite the digital age, banking is still a people business. A leader must devote to building the foundation of a united team, as human capital is the most important asset of all. 

One of the most important skills that I like to emphasise as a leader is curiosity. In my first year as president director of Bank Danamon, I visited numerous cities across Indonesia to listen to customers, employees, regulators, and the media, in order to understand their expectations and concerns, and how I can help them in achieving their goals.

The biggest change this brought about would be an increase in collaboration in Bank Danamon. It has helped us to instill a spirit of collaboration within the company, either internally by maximising teamwork or with external partners to leverage each other’s strengths. In my initial years as president director, we managed to sign partnership agreements with renowned multinational companies, fintechs, and startups. In addition, we progressed numerous collaborative initiatives with MUFG and its partner banks across the regions.  

FBP:What does resilience mean to you personally? How does one become resilient?

YI: Resilience means being able to adapt and be agile. Agility can work better if you anticipate instead of waiting and reacting, focus on core, and leverage the individual skills of workers to achieve the best total value. Acknowledge both stability and dynamic capabilities with regards to your people, resources, culture, processes, and structure.

For me, building resilience is like building muscle. Increasing your resilience takes time and endurance. Focusing on these four core components — connection, wellness, healthy thinking, and meaning — can empower us to withstand and learn from difficult and traumatic experiences.

Connecting with empathetic and understanding people can remind us that we’re not alone in the midst of difficulties. Self-care is also a legitimate practice for mental health and building resilience. Being a volunteer for local organisation, or simply support a friend in their own time of need, we can garner a sense of purpose, connect with other people, and tangibly help others, all of which can empower us to grow in resilience.

FBP: COVID-19 is a crucible within which resilient leadership has been refined. What do you think is at the heart of resilient leadership?

YI: Resilient leaders must be genuine, sincerely empathetic, walking compassionately in the shoes of employees, customers, and their broader ecosystems. But they must simultaneously take a hard, rational line to protect financial performance from the invariable softness that accompanies such disruptions.

Resilient leaders must also be skilled at triage, able to stabilise their organisations to meet the crisis at hand while finding opportunities amid difficult constraints. They must take decisive action/decision with courage, based on imperfect information, knowing that expediency is essential. One must also stay focused on the horizon, anticipating the new business models that are likely to emerge and sparking the innovations that will define tomorrow and inspire others to persevere.

In everything they do during a crisis, resilient leaders express empathy and compassion for the human side of the upheaval.


Keywords: Digital Capabilties, Lending, Resiliency, Growth, SME, Digital Services, Partnership, Startups, Ecosystem, Covid-19
Institutions: Bank Danamon, MUFG, Investree
Guest: Yasushi Itagaki, Foo Boon Ping
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