Bank BTPN’s Henoch Munandar prioritises sustainable financial inclusion and digitalisation in Indonesia

Bank BTPN (BTPN), majority owned by Japan’s Sumitomo Mitsui Banking Corporation (SMBC), is making significant strides in financial inclusion and digitalisation under the leadership of its president director/CEO, Henoch Munandar. He shared insights into the bank's strategies and achievements in a recent conversation, highlighting the commitment to enhancing social value and sustainable growth.

Financial inclusion and community empowerment

According to Munandar, BTPN places a strong emphasis on financial inclusion, particularly targeting rural communities in Indonesia. "Our business model is really focused on financial inclusion for rural people, based on community engagement and uniquely recognised by the International Finance Corporation (IFC)," he stated. A significant aspect of this approach is empowering women. He explained that the bank supports households where the husband is working, with initiatives similar in concepts pioneered by Bangladesh’s Grameen Bank, while engaging with the wives to enhance their economic participation and activities. This is done through the bank’s subsidiary, BTPN Syariah, a unique syariah bank which incorporates financial inclusion, women empowerment, and Islamic banking in all its business activities.

Transformation and digitalisation

Since its acquisition by SMBC in 2019, BTPN has significantly transformed its business model. Munandar highlighted, "SMBC recognised BTPN as a crucial financing arm to establish social value through ESG (Environmental, Social, and Governance) initiatives. Our goal is to integrate social responsibility and sustainability into our business model." He stressed the importance of sustainable profit generation, noting, "Sustainability means profitability; otherwise, we operate like a charity. We aim to give back to society through various forms, including ultra-micro financing, which has shown positive impacts on clients' quality of life."

Digitalisation is another cornerstone of BTPN's strategy. Munandar outlined the bank's journey with its digital banking app, Jenius, launched eight years ago. "We were the first digital banking app in Indonesia, pioneering the digital onboarding process. Now, we face competition from various new entrants, but our experience allows us to navigate these challenges effectively," he said. The bank aims to leverage its digital platforms to enhance financial literacy and inclusion, particularly in underserved regions. The digital banking service now has about five million active users.

Munandar discussed the role of digitalisation in enhancing financial services. "Digital literacy and financial literacy are responsibilities of all stakeholders, including customers. We must work collectively to enhance these skills," he asserted. Despite high internet and social media penetration in Indonesia, channeling this digital engagement towards constructive financial inclusion remains a challenge. Munandar emphasised the importance of creating an ecosystem that supports digital and financial literacy, involving industry associations and government bodies.

Sustainable financing and ESG initiatives

BTPN is also making notable advancements in sustainable financing in Indonesia. Munandar mentioned, "BTPN, in collaboration with SMBC, was the first bank to finance a wind energy project in Indonesia. We are also involved in significant solar panel projects, contributing to the country's energy transition." He emphasised the importance of maintaining sustainability in ESG initiatives, explaining, "ESG should be sustainable, ensuring mutual benefits for both consumers and the bank. We do not frame ESG as mere corporate social responsibility (CSR); it's integral to our business model."

The bank's efforts have not gone unnoticed. BTPN was recognised by the IFC, a member of the World Bank Group, for its green bond issuance, showcasing its commitment to sustainable finance. Munandar acknowledged the role of public-private partnerships in advancing ESG goals, urging for supportive policies from the government to accelerate adoption.

Munandar highlighted the bank's involvement in various sustainable projects, noting that BTPN, along with SMBC, financed Indonesia's first wind energy project and a significant solar panel installation in West Java. He stressed that ESG initiatives are not just about corporate social responsibility but are integrated into the bank's core operations, ensuring long-term sustainability and mutual benefits for both customers and the bank.

Challenges and opportunities

Munandar also discussed the challenges BTPN faces, particularly in financial and digital literacy. "Financial literacy and digital literacy are responsibilities of all stakeholders, including customers. We must work collectively to enhance these skills," he asserted. Despite high internet and social media penetration in Indonesia, channeling this digital engagement towards constructive financial inclusion remains a challenge.

Furthermore, Munandar pointed out the need for improved infrastructure to support digitalisation efforts. He cited examples from China and India, where government involvement has significantly boosted digital adoption. "Government plays a crucial role in creating a supportive ecosystem for digitalisation," Munandar said, emphasising the need for collaboration between the private sector and government bodies to replicate such successes in Indonesia.

Looking ahead, BTPN aims to continue its efforts in digital and financial inclusion while expanding its sustainable financing initiatives. Munandar envisions a future where BTPN plays a pivotal role in Indonesia's economic development, leveraging technology and sustainable practices to create lasting social value. The bank's commitment to innovation and community empowerment positions it as an important player in shaping the future of banking in Indonesia.

Meet Henoch Munandar, Altona Widjaja, Edisono Limin, Indra Utoyo, and other senior banking industry decision makers and practitioners at Finance Indonesia on 12 September 2024. Read more:https://theasianbanker.com/finance-indonesia-2024/