Digital Product Innovation is the Key for Bank Raya

The following article was translated using both Microsoft Azure Open AI and Google Translation AI. The original article can be found in Inovasi Produk Digital Menjadi Kunci Bank Raya

PT Bank Raya Indonesia Tbk or Bank Raya is a digital bank under the auspices of PT Bank Rakyat Indonesia (Persero) Tbk or BRI Group. Before being acquired as a subsidiary of the BRI Group, Bank Raya was known as PT Bank Agroniaga Tbk. In 2011, BRI acquired the bank, so that the following year the name changed to PT Bank Rakyat Indonesia Agroniaga Tbk.

Then, for the first time, BRI Agroniaga launched a digital feature in the form of the “pinang” application to streamline its customers’ loan application process in 2019. Over time, the name Bank Raya was coined in 2021 as part of the company’s plan to transform into a digital bank.

In the financial performance report for the third quarter of 2023, Bank Raya recorded a net profit after tax of Rp 14.7 billion, representing a 28% increase compared to the net profit at the end of 2022. Furthermore, the number of customers has reached over 770,000 Customer Information Files (CIF).

Throughout the third quarter of 2023, the number of transactions on Raya Application increased by 287.8 percent annually, accompanied by an increase in the nominal amount of 196.2 percent annually.

In the midst of their busy lives, Bank Raya President Director Ida Bagus Ketut Subagia, Bank Raya Finance Director Rustarti Suri Pertiwi, and Digital and Operations Director Bhimo Wikan Hantoro took the time to answer a number of Kompas questions when met in their room, at Brilian Tower, Jakarta, Wednesday (8/11/2023). Some of these questions related to Bank Raya’s background, innovations being developed, and future targets.

In the midst of the era of digital transformation of the conventional banking industry, why was Bank Raya formed?

If we talk about the digitization of conventional banks, it has already happened now, including at BRI. Various services have been carried out using applications, including its employees who have already been using BRISPOT.

Then, why did Bank Raya appear there? That’s because we want to strengthen the leadership of the parent business, especially in the micro sector because there are still many niches that have not been fully explored by the parent company. For example, in small volume, short term, bailout funds, then in blue collar, both in the BRI Group and customers whose payroll is at BRI and at Bank Raya.

One more key in this digital banking business is innovation by creating comprehensive products to capture the opportunities that exist in the BRI ecosystem, such as Brilink agents, we provide bailout funds which will make things easier for Brilink agents so they don’t disrupt their main business. Then, there are also flexi areca palms, and performance areca palms which are linked to vendors because vendors collaborate a lot.

Moreover, as a digital attacker, the products offered by Bank Raya are indeed different from BRI products. We are here in charge of preparing digital infrastructure, so that the hope is that when a customer upgrades, they will remain at BRI. Apart from that, the tenor of bailout funds is also shorter than the tenor of bank credit, which can be up to 7 days.

The existence of a digital bank can also ease the process of transactions for agents because whenever they need additional balance for transactions, it can be immediately served through digital processes.

So, if we were to compare, Bank Raya is like a lifeboat for BRI, as the large aircraft carrier. This lifeboat certainly has advantages in terms of agility. As such, we undertake projects that cannot be tackled by the aircraft carrier or are not a priority for the aircraft carrier due to its limitations.

Watch this interview: Transformation of Bank Raya into a Digital Attacker BRI Group

Then, we also specifically work on the SME sector. As we know, financing in the SME sector presents its own challenges since the majority of it involves informal workers. Nonetheless, it is precisely because of this that our services can reach those who cannot be served by conventional banks.

“As a digital bank, we continuously enhance our service through innovation and technology to ensure the safety and convenience of customers in digital banking transactions.”

Then, what are Bank Raya’s superior features compared to other digital banks?

When compared to other digital banks, we are more advanced because we collect data. When it comes to digital features, perhaps in general, we are the same as other digital banks. However, when it comes to digital lending, our features are complete.

Through the Pinang Connect feature, we distribute loans to business actors viafintech or P2P lending. However, our approach is end to end. This means that we really want to maintain credit quality by first finding out the character of the customer’s cash flow. In this way, we are actually financing someone whose cash flow is clear.

Apart from that, we also continue to innovate the digital saving feature to win the competition, one of which is Saku Bisnis. Saku Bisnis is to help customers manage their finances and daily transactions, especially business people who are starting a business.

Saku Bisnis has been equipped with a business pocket creation menu and a mass transfer menu which allows customers to make transfers simultaneously to ten destination accounts in real-time, making it easier for business people to carry out Payroll transactions or payments to suppliers, separation of cost allocation into five different business pockets, as well as checking account mutations to monitor business operations.

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What are Bank Raya’s targets for the future? What do you want to target over the next five years?

“In the first phase, we may focus on the transformation process that will be carried out until 2025. Then, we can start to develop our digital business, although we are already quite aggressive at this point. Our main target is to develop the existing ecosystem because of its tremendous potential. For example, for the Brilink agency, we have already provided support funds for more than 25,800 agencies until September 2023, while the potential is more than 710,000 agencies.”

With the achievement of financing to 25,800 agents, during the January-September period, direct financing (disbursed) was already IDR 7 trillion, even since the beginning of the financing, if we calculate it, it could have been more than IDR 10 trillion. The measurement in the digital banking business is not how outstanding it is, but rather the direct financing. This also includes recurring (regular payments), because that is where the income will appear.

Then in 2026, we will truly declare ourselves as a digital bank that has become a digital attacker. Now, in the short term, we are still focused on our own ecosystem.

On the other hand, as a digital bank, we continue to improve our services through innovation and technology.

On the other hand, as a digital bank, we continue to improve services through innovation and technology to ensure customer security and convenience in digital banking transactions. Improvement in the system to protect customer data by implementing reliable security technology and protection systems continues to be carried out.

All of this is to ensure the security of customer data and transactions in line with BRI Group, which continues to adopt and implement a series of policies and operational guidelines for securing customer data privacy across all operational work units.

To ensure customer comfort and security in transactions, we also continue to improve security in the application through layered security such as Multi Factor Authentication (MFA), transaction notifications, Biometric Authentication and AI Based Fraud Detection System. i>(FDS). This innovation will continue to be improved.

In addition to improving security and technology, we do not forget to implement a comprehensive and continuous risk assessment of the risk management process, including reviewing every proposed new product and activity. By having a solid security and privacy system, strong trust will grow among customers, and customer trust is the main factor that needs to be strengthened in the customer experience.

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