Leo Koesmanto drives Bank Saqu’s digital banking journey in Indonesia

Leo Koesmanto, president director (CEO) of Bank Jasa Jakarta (BJJ), is spearheading a digital revolution in Indonesia’s banking sector. With the launch of Bank Saqu in November 2023, Koesmanto is modernising BJJ to meet the needs of solopreneurs and small and medium-sized enterprises (SMEs), and may just be setting new standards in customer-centric digital banking.

BJJ, a KBMI -1 bank with a 40-year history of serving small and medium-sized enterprises (SMEs), had to evolve as digital banking gained prominence. In 2022, BJJ was acquired through a joint venture between Astra Financial, the financial services division of Astra International, one of Indonesia's largest conglomerates, and WeLab, a fintech leader from Hong Kong, to create Bank Saqu.

This effectively puts BJJ in KBMI-2 category, and the partnership was crucial in transforming BJJ’s traditional banking model into one with a modern, digital-first approach. KBMI-1 banks are those with a core capital of up to IDR 6 trillion ($386 million), while KBMI-2 banks have a core capital between IDR 6 trillion ($386 million) and IDR 14 trillion ($900 million).

“Bank Saqu is the digital banking services provider owned by Astra Financial and WeLab. This partnership allowed us to leverage advanced technology while maintaining the personalised service that BJJ is known for,” Koesmanto explained. The bank's rapid success, acquiring over a million customers within the first six months—35% of whom are solopreneurs—demonstrates the effectiveness of this strategic move.

Adopting advanced technology with Temenos Transact

A cornerstone of Bank Saqu’s transformation is its adoption of the Temenos Transact core banking system. This cloud-native platform also powers WeLab’s first digital bank, WeLab Bank, one of eight licensed virtual banks in Hong Kong. The platform provides the flexibility and scalability necessary for rapid growth.'

Koesmanto highlighted the critical role this technology played in the bank’s early success: “We were fortunate to have a new cloud-based core banking system. When we reached a million customers within six months, the scalability of Temenos Transact allowed us to continue growing without concerns about capacity or service disruption.”

Koesmanto described the decision to use Temenos Transact as pivotal: “Venturing into a cloud-based core banking system was a bold move, but it has enabled us to scale quickly and adapt to the fast-changing market demands in Indonesia.”

The platform, implemented and integrated with the help of Tech Mahindra, supports seamless digital services, such as instant account opening and real-time payments, while its modular design allows Bank Saqu to innovate continuously. The development of Tabungmatic, a savings feature that rounds up transaction amounts into a high-yield account, showcases how this technology facilitates customer-centric innovation.

AI and data analytics enhance customer experience

Bank Saqu’s digital strategy also leverages AI and data analytics to better understand customer needs, manage risk, and improve operational resilience. “AI brings a lot of possibilities,” Koesmanto stated. He elaborated how AI can be used for automating customer service and enhancing underwriting models, with plans to implement processes in the future. The use of AI will allow Bank Saqu to refine its customer interactions and improve risk management, making it a vital tool in the bank’s digital arsenal.

Relationship-based hybrid banking model

Bank Saqu’s approach to digital banking is not just about technology but also about maintaining the relationship-based model that has been a hallmark of BJJ. Koesmanto noted that while Bank Saqu is a digital bank, it also integrates aspects of traditional relationship banking, creating a hybrid model that serves both online and offline customers.

“We call it a relationship-based hybrid model. While we focus on digital services, we continue to value the personalised interactions that are crucial for many of our SME clients. This model allows us to cater to a broad range of customer needs, ensuring that even as we innovate, we don’t lose the human touch that defines our service.”

This hybrid approach is particularly important for solopreneurs and SMEs who often require more personalised services and guidance. By combining the efficiency of digital banking with the personal relationships built through traditional banking, Bank Saqu aims to offer a comprehensive service that adapts to the varying needs of its clients.

Focussing on solopreneurs

Indonesia is experiencing a significant rise in solopreneurship, driven by the gig economy. Bank Saqu is strategically positioned to serve this growing market segment. “Solopreneurs need more than just basic banking services; they require integrated financial management tools that fit into their daily lives,” Koesmanto said. He also pointed out that 55% of Bank Saqu’s solopreneur customers are under the age of 35, highlighting the bank’s appeal to younger entrepreneurs. To meet these needs, Bank Saqu offers several innovative products.

Saku is a ‘pocket’ feature that allows users to manage multiple income streams and expenses through virtual pockets within their accounts. “This is particularly beneficial for solopreneurs juggling various financial responsibilities,” Koesmanto pointed out.

Indonesia’s first community-based savings product, Busposito, is a social savings initiative that enables groups of people to pool resources, increasing their savings rate. “The more participants, the higher the potential interest rate, reaching up to 7% per annum,” said Koesmanto.

BJJ’s Tabungmatic round-up saver automatically rounds up transaction amounts, depositing the difference into a Saku Booster account with up to 10% interest per annum. “Our message is simple: every time you transact, you earn something, because it’s your money,” Koesmanto added.

Promoting financial inclusion and literacy

Bank Saqu’s commitment to financial inclusion is evident in its efforts to reach underbanked segments of the population. Koesmanto stated: “Our goal goes beyond offering products; we aim to support our customers throughout their financial journey. By focussing on financial education and a user-friendly experience, we empower solopreneurs to achieve their financial goals.”

The bank’s innovative products are designed not only to meet customer needs but also to enhance their financial literacy, ensuring that they can manage their finances effectively and confidently. The BJJ platform also aims to improve access to banking services for underbanked and unbanked populations, leveraging digital tools to democratise financial services for Indonesians.

Measuring success using metrics and KPIs

Koesmanto also discussed the key metrics and key performance indicators that Bank Saqu uses to measure the success of its technology investments and strategic initiatives. “Our initial metrics focus on how many customers we can acquire, but it doesn’t stop there. We also look at the balances these customers bring, how actively they engage with our services, and how we can lend out those balances effectively,” Koesmanto explained. He stressed that while the bank is new, it’s crucial to calculate the return on investment over time, ensuring long-term sustainability.

Expanding the ecosystem

Looking ahead, Koesmanto outlined ambitious plans for Bank Saqu. “We are committed to solidifying our position as a leading digital bank in Indonesia, particularly for solopreneurs. Our product offerings are still in their early days, but we are continuously developing new products to meet the evolving needs of our customers.”

Bank Saqu’s integration into Astra Financial’s extensive ecosystem provides a significant advantage. “Being part of the Astra ecosystem allows us to reach a captive market by leveraging our ecosystem customer base and embedding ourselves in the use cases. This is a key factor in our ability to scale rapidly and efficiently,” Koesmanto said.

Under his leadership, Bank Saqu is poised to become a pivotal player in Indonesia’s digital banking revolution. By addressing the unique needs of solopreneurs and SMEs, leveraging advanced technology like Temenos Transact, and fostering strategic partnerships, Bank Saqu is not only expanding BJJ’s market reach but also contributing to the financial empowerment of Indonesia’s growing entrepreneurial community. As Koesmanto succinctly puts it: “We are here to innovate, scale, and serve the future of banking in Indonesia.”

This approach exemplifies how traditional banks can successfully navigate digital transformation while maintaining the core values of personalised service and customer-centricity.

Connect with senior banking decision-makers and industry practitioners at Finance Indonesia on 12 September 2024. This year’s theme, Innovation and regulatory excellence: Charting our future in banking, will explore the key trends shaping the industry. For more information, visit: https://theasianbanker.com/finance-indonesia-2024/