Digital Disruption in Banking

- 13 January 2022 07:30 WIB
Digital banks are multiplying. (Unsplash/Pickawood)
Digital banks are multiplying. (Unsplash/Pickawood)

JAKARTADAILY.ID - The rise of digital disruption has forced banks to explore new ways to keep their customers and remain relevant in the future.

Digital disruption is the process of changes when the value of an industry's existing products and services is affected by new digital technologies.

Piter Abdullah, Research Director at the Center for Reform on Economics, said that the rise of digital disruption has led to the evolution of banks. In the future, banks will compete in the digital era. Instead of focusing on one particular strategy, each institution will use a different approach to win in the digital age.

"In the end, all banks will become digital banks," said Piter to

According to Piter, there are two sides to the digital bank strategy: the digital bank that uses a lifeboat of digital banks and the digital bank that uses application development.

The example of the lifeboat strategy is adopted by Bank Central Asia (BCA). BCA acquired Bank Royal Indonesia and released BCA's Blu, the digital version of BCA. So, the idea of the lifeboat strategy is the bigger banks acquired smellers bank to develop the digital version of the bank. This is done so the big banks can focus on their current services while stepping up their game to go digital.

Meanwhile, the example of a non-lifeboat digital bank is Line Bank. Line Bank is a product from Line Corp. and Bank KEB Hana Indonesia. The difference between Line Bank and BCA Blu's is that Line Corp. was not a bank that acquired a smaller bank. Line Corp. and Hana Bank cooperate to publish a new digital bank. Another example of this is Bank Mandiri's Livin'.

The majority of big banks in Indonesia adopted the lifeboat strategy mainly because they need to keep their operations and services running while keeping up with the digital disruption in the banking industry. Bank Rakyat Indonesia also rebranded its subsidiary, BRI Agroniaga, to become a digital bank. Bank Negara Indonesia (BNI) acquired Bank Mayora and will rebrand it into a digital bank as well.

Editor: Mukhtar Wijaya



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