Here is the transcript:

Foo Boon Ping (BP): Good afternoon, and welcome to another session of RadioFinance. This afternoon. We're very happy to be speaking with Pak Kaspar Situmurong, who is the CEO of a newly formed digital bank, a subsidiary of BRI, the largest bank in Indonesia. The name of this new bank is Bank Raya. It started as BRI Agro and in 2021, it was rebranded Bank Raya, to be closer to the branding of BRI. And today, we're very happy to be speaking with Pak Kaspar to get a sense of the Indonesian banking industry going through COVID 19 and preparing itself for a post-COVID 19 world. And I like to start by asking you about this digital bank, Bank Raya, what is its mission? What are your priorities in setting up this digital bank?

Kaspar Situmorang (KS): 

For the past two years since 2020, we've seen a massive shift of trends that has changed Jakarta, and Indonesia. For us, two things have changed. The first in terms of how people apply for financial services, especially in the COVID era for the past two years. It amplified the whole digitalisation force. And when people want to open savings account, when people want to apply for lending. I still remember back in 2018, 2019, even 2020, to amplify the digital savings, to lending is quite challenging. However, it's been more amplified two years down the road. And the second is, of course, the way we see the demand side. For the past two years, we've seen a new kind of urgency, and requirements from the specific segment.

Back in 2020 for example, When COVID hit Indonesia, a lot of the population got hit, especially some of those in services that got laid off from all of those industries and companies. But fortunately, they are not giving up because there are plenty of available options from platform technology. So, they download those apps and they become ride hailing drivers or ecommerce merchants or they become banking agents. And some of them become online teachers, some of them become merchants in agritech, and so on and so forth. There's so many. This is what we call the new influx of gig economy workers, that's the sexy name, but the more common language, by the name of the informal workers, so now they have become informal workers. They have salary, but there's no paycheck, payslip. So, this is the influx of what we call the new economy. And based on our data set from our chief of economics, so back in 2020, there is an influx of 27% of population into these informal sectors. So, by 2020 about 46 million people are already in those informal sectors, and it's good for Indonesia, because they're not adding to unemployment. And from the forecast done five years down the road, forecast in 2025, there will be around 74 million in the population as informal workers. So that's why we communicate with our holding company, this is the segment that is not being served properly now.

I think most of them are, we call UMKM (Usaha Mikro Kecil dan Menengah) in Indonesia, or the MSMEs. But this are the new MSMEs, because often transactions were running on top of a smartphone. Previously, lots of people in Indonesia were using smartphones for their lifestyle, watching YouTube, watching TikTok, watching Instagram. But this population, the informal sector, they really use their smartphone for very productive reasons, totally, making more income for themselves and for their families. So, this is the segment that we've seen in Bank Raya, the digital bank of BRI Group. We want to serve this population. And our goal is by the end of 2025, we'll try to serve around 10% of about 74 million people. So, about seven to eight million of these informal workers. We want to serve their businesses, themselves, and also their employees. So, this is the population that is also served in our BRI holding group. This is also one of our targets as well, because BRI is well known for serving the micro, ultra-micro and the gig economy workers, they are part of UMKM as well, they have a business, some of them have employees as well. But the paycheck is not in the form of a slip. They are either paid cash, or via transfers. So, this is the population that we want to serve and bring financial access closer to them, so that the two things that we've seen for the past two years. There's a lot of happening in Indonesia right now. I think there's something that we can share.

BP: So your mission and your priorities remain consistent with the group company, BRI and you want to continue to serve the ultra-micro, the underserved segments. In terms of the way digital banks are being measured today. Increasingly, it is not just about the number of users. It's also about being commercially sustainable, earning a profit. When you study this segment, on first impression of the gig economy, that it is different from other digital banks who are serving the younger life lifestyle, what you call the millennials, and the Gen Zs. But, of course, your choice of this segment is also consistent with what BRI stands for.

KS: Our goal is not serving their lifestyle, not serving the lifestyle of millennials and their needs, that kind of stuff. We're focused on the life needs. So, we're focused on the productivity of this particular segment though. And these new, what I call UMKM, new MSMEs are very active in their smartphones. And this segment, they are mostly underbanked not unbanked. We're a digital bank, it's impossible to serve the unbanked. To serve the unbanked is the holding group, the BRI holding company. We try to serve and provide some of the financial services like for example, savings account by the name of Saku Raya. Our savings account has some forms of wallets. So, because we learn from the informal workers, they tend to find it difficult to manage their incomes and expenses, health, expenses for other necessity and stuff. So, they mix it all together, and suddenly they lost it all. So that's why we provide Saku Raya to split and divide their incomes and expenses properly. And this also an increment to other financial services like lending. We try to provide lending services to those workers in the informal sectors. They are able to get some sort of “pay later” product, which has a tenure of about 5 to 14 days. That's how we see and that's how we hear the needs of the 75 million people. I think they deserve better financial services and we try to serve them with digital financial services for now.