J Trust Bank overhauls legacy system

J Trust Bank, formerly known as Bank Mutiara, was acquired by J Trust Co., a Japanese financial services group, in 2014. This acquisition was part of J Trust’s broader strategy to expand its presence in Southeast Asia, particularly in markets where financial sectors were undergoing significant transformations.

Bank Mutiara, originally established as a state-owned entity after the Asian financial crisis, was struggling with performance and was placed under the control of the Indonesia deposit insurance corporation, Lembaga Penjamin Simpanan (LPS) until it was acquired by J Trust. The acquisition not only provided the bank with much-needed capital but also brought in expertise aimed at revitalising its operations and enhancing its service offerings.

The core issue driving J Trust Bank’s current technological overhaul is the severe limitation of its legacy systems. These systems, which had been in place for many years, had become outdated, leading to significant operational inefficiencies and hindering the bank's ability to grow and adapt to new market demands.

"Our legacy systems were no longer sufficient to support the scale and complexity of our operations," said Cho Won June, director of information strategy and technology at J Trust Bank. "We faced numerous challenges, including the lack of support for these old systems and the difficulty in integrating them with newer technologies."

Prior to the transformation, the bank struggled with slow transaction processing times, which directly impacted customer satisfaction. The legacy systems also limited the bank's ability to introduce new financial products quickly, making it difficult to stay competitive in Indonesia’s fast-evolving financial landscape.

Operational inefficiencies and strategic responses 

To address these challenges, J Trust Bank embarked on a comprehensive digital transformation initiative. This includes replacing the old core banking systems with a more modern, cloud-based solution, specifically the Temenos core banking platform. This platform is known for its scalability and flexibility, which are crucial for supporting the bank’s future growth and operational needs.

"We are transitioning to a new core banking platform that will provide the foundation for our future operations," Cho noted. "This new system will allow us to improve operational efficiency, reduce costs, and offer new services that meet our customers' evolving needs."

The shift to a cloud-based system has enabled J Trust Bank to significantly reduce its transaction processing times, leading to faster service delivery. Additionally, the bank has been able to roll out new digital products, such as mobile banking apps and digital loans, which were previously constrained by the limitations of the legacy systems.

Enhancing customer experience through technology

A significant part of J Trust Bank’s transformation is focused on improving the customer experience. The limitations of the legacy systems had made it difficult for the bank to offer a seamless, real-time banking experience. By implementing the new Temenos core banking platform, the bank aims to provide faster and more reliable services.

"Customer satisfaction is a top priority for us," Cho explained. "The new system will enable us to offer a more personalised and efficient banking experience, which is critical in today’s competitive environment."

For example, the new system has allowed J Trust Bank to introduce personalised financial services, such as custom savings plans and targeted loan products, which are tailored to meet the specific needs of different customer segments. The bank has also enhanced its mobile banking app to include features such as real-time transaction alerts, artificial intelligence (AI)-driven financial advice, and easy access to loan applications, all of which have contributed to a significant increase in customer engagement.

Regulatory compliance

The Indonesian regulator has been instrumental in driving the digital transformation of the banking sector. The regulations encourage banks to adopt digital banking solutions and improve their operational efficiency. J Trust Bank’s transformation aligns with these regulatory requirements, ensuring that the bank remains competitive and compliant in the evolving financial landscape.

"By aligning with the regulator's digital banking guidelines, we’re not only improving our systems but also ensuring that we meet all regulatory standards," Cho said. "This has been a key factor in our decision-making process."

The regulator has set ambitious targets for financial inclusion and digital banking adoption in Indonesia, aiming to increase the percentage of banked individuals and promote the use of digital payments. J Trust Bank's digital transformation directly supports these national goals, particularly through the introduction of mobile banking services that reach previously unbanked populations in remote areas.

Strategic vision and future goals

The ultimate goal of J Trust Bank’s digital transformation is to position itself as a leader in the Indonesian banking sector. By addressing the limitations of its legacy systems and investing in modern, scalable technologies, the bank aims to enhance its market position and provide superior service to its customers.

"Our vision is to be at the forefront of digital banking in Indonesia," Cho concluded. "This transformation is a crucial step towards achieving that vision and ensuring that we can continue to meet the needs of our customers."

Looking ahead, J Trust Bank plans to leverage its new digital capabilities to expand its customer base, particularly by targeting small and medium-sized enterprises (SMEs) with tailored financial products. The bank is also exploring opportunities to integrate blockchain technology for enhanced security and transparency in transactions, as well as to develop partnerships with fintech companies to further innovate its service offerings.

J Trust Bank’s digital transformation journey is a strategic response to the pressing challenges posed by its legacy systems. With a focus on modernising its core banking infrastructure, improving operational efficiency, and enhancing customer service, the bank is on its way to achieving its long-term goals and maintaining its competitive edge in Indonesia’s dynamic financial landscape. The bank believes its commitment to innovation and customer-centric service positions it as a serious player in the future of Indonesian banking.