Neo banking, a boon for financial inclusion in Indonesia

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We recognise the demand for simpler and faster digital banking. As well as helping banks to provide this service to their clients through next-generation technology, if we can help them make a real difference to the way people bank and improve people鈥檚 lives in the process, all the better. 鈥 Simon Paris, Deputy CEO at Finastra.

Regulatory initiative:

In 2018, to capitalise on the increased usage of the internet and growth in fintech solutions, the Otoritas Jasa Keuangan (OJK), the financial services authority of Indonesia established a legal framework. The framework governs the neo banking services provided by banks and non-bank players in Indonesia.

According to the regulation, neo banking services can either be provided directly by the banks or based on collaborations between banks and financial services/non-financial services institutions. This enables Indonesian citizens to access banking services such as requesting a credit card or opening an account using their mobile phones.

Incumbent powerhouses such as DBS bank, UOB, and Bank Tabungan Pensiunan Nasional (BTPN) bank have established their digital spin-offs- Digibank, TMRW, and Jenius respectively. Meanwhile, major technology companies such as Gojek and Lippo group, which are currently offering e-wallet services, too are establishing various innovative banking services to increase their market share.

Snapshots of Indonesia鈥檚 neobanks:

Table 1: Profile of Indonesia鈥檚 neobanks
Name Founding year CEO
Jenius* 2016 Chow Ying Hoong (VP Commissioner)
DigiBank* 2017 Paulus Sutisna (President)
TMRW* 2020 Kevin Lam Sai Yoke
*These neobanks are built on their own parent banks鈥 existing funds.
Note: The annual revenue of the three neobanks is unavailable.

In-depth neobank analysis on the 5-building block framework

Customer centricity:

  • Every neobank in Indonesia offers an enriched customer experience by using UI-UX design to create lucrative and gamified tools and follows a mobile-first approach. Every bank employs AI-ML tools to offer its customers spend and budget analytics.
  • TMRW also uses unique AI algorithms, data analytics tools, and gamification to encourage customers to save more and design their cards.
  • The three neobanks also offer their customers 24*7*365 assistance, real-time notification alert, and hyper-personalised services.
  • Moreover, Digibank and TMRW offer goal setting for spend and save.
Figure 1: Indonesia鈥檚 neobanks represent all customer centricity parameters

Customer reach:

  • All 3 neobanks in Indonesia cater to the millennial and Gen Z segment.
Figure 2: Customer segment and the total number of customers

Product stack (Banking solutions):

  • All three neobanks in Indonesia offer its customers unique payment options such as virtual debit cards and credit cards.
  • Digibank provides business/personal overdraft facilities in addition to offering basic loan services for retail and SME sector.

Methodology: Each neobank product stack is a representation of 4 key parameters across 11 product types

  1. Unavailable: Does not have a product type in their stack
  2. Testing: The product is currently in the pilot-testing phase, not live to all customers
  3. Established: The product is a part of their stack and fully available for customers
  4. Unique: A unique offering within a product type which is exclusively provided by the neobank
Figure 3: Representation of each neobank鈥檚 product stack

Partnership ecosystem:

  • All neobanks in Indonesia have partnered with network providers such as Mastercard, Visa, GPN, ATM Bersama, Prima, and Plus to provide payment services to their customers.
  • Neobanks鈥 partnership focuses on technology providers such as Finastra, Kasito, and BNI Tapcash for AI technology, digital banking and digital solutions and transformation.
Figure 4: Partnership ecosystem of Indonesia鈥檚 neobanks

Open Banking:

  • Indonesia is a follower of various open banking initiatives taken by the neighbouring Asia Pacific countries, largely due to limited regulatory guidelines and low digital readiness.
  • All three neobanks in Indonesia use the API development portal of their parent banks to create a third-party market space.
Table 2: API Developers for Indonesia鈥檚 neobanks
Name Sandbox/Developer
Digibank DBS Developers
TMRW UOB developer

Indonesian neobanks鈥 outlook:

  1. Roughly 51%** of the population is unbanked and 55%** of non-digital customers are willing to shift to neo banking in the next six months. The neobanks will leverage this growth in the use of the internet and mobile phones in banking the unserved population.
  2. In the future, Indonesia will witness a rise in the number of partnerships formed among small fintech players and neobanks which follow a targeted approach to cater to individual segments namely- SME, rural, and Millennial.
  3. Moreover, the traditional banks in Indonesia are poised to gain a major chunk of the market share by partnering with smaller neobanks and fintech startups.
  4. Banks can achieve agility by adding features to their services and products without spending more on core system transformation.
  5. Furthermore, the developments in the neo banking regulatory framework will enable the establishment of operational banks by non-banking players in the future.

We have sourced information pertaining to the funding value, round, customer base, revenue, and product information from Crunchbase, Owler, respective company鈥檚 annual reports, and their websites.

*e-Conomy SEA 2019 by Google, Temasek, and Bain & Company

**Digital banking in Indonesia: Building loyalty and generating growth, McKinsey & Co

Akshita Maruthavanan, Research Intern, contributed to this research by assisting in writing, conducting preliminary analysis and conceptualising the topic.


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