Another digital bank props up in Indonesia, this time by Bukalapak

• BukaTabungan, the first digital banking service from Bukalapak in partnership with Standard Chartered, will provide digital banking access to Bukalapak’s ecosystem of more than 110 million users and 20 million business owners.
• The digital banking service combines the reach of Bukalapak’s all-commerce platform and the technology of Standard Chartered’s Banking-as-a-Service solution.

Indonesia has seen many developments in its digital banking sector in the past 12 months —  especially after the Indonesian financial authority, OJK, introduced a number of new regulations in August 2021, to create an orderly and safe ecosystem for both players and customers. As of today, there are more than a dozen digital banks in Indonesia, with the latest by Bukalapak and Standard Chartered making their foray into the market this week.

Known as BukaTabungan, the digital bank by Indonesia’s first public-listed technology company, Bukalapak, leverages the reach of its all-commerce platform and the technology of nexus, a Banking-as-a-Service (BaaS) solution powered by Standard Chartered. BukaTabungan came on the heels of an earlier announcement on Bukalapak and Standard Chartered’s strategic partnership to launch innovative offerings in efforts to advance their focus on digital banking, and widen financial inclusion to the country’s underbanked segment. 

For context, about 66% of Indonesia’s 275 million inhabitants are currently unbanked. The country is also home to over 60 million micro, small, and medium enterprises (MSMEs), but nearly 70% of them don’t have access to credit, according to data by Bank Indonesia. Fortunately, thinks started taking a good turn since the last one year or so with the rise of digital banks by December 2021, when it comes to the share of adults with a digital bank account, Indonesia ranks second in the world, excluding China and India, at 24.9% penetration rate, Finder’s report shows. 

What is Bukalapak offering via BukaTabungan?

BukaTabungan will offer banking services that are inclusive to Bukalapak’s ecosystem that currently serves 6.8 million online merchants through its marketplace; 14.2 million businesses through its online-to-offline platform, Mitra Bukalapak; and more than 110 million users throughout Indonesia, who mostly transact outside Tier-1 cities.

“Using advanced automation and security technologies employing artificial intelligence, biometric facial recognition and E-KTP (Indonesia’s biometrics-enabled ID programme) validation, opening an account on BukaTabungan is truly paperless,” the company said in a statement yesterday. With banking services, BukaTabungan also aims to support the business continuity and development of MSMEs who make up 97% of Indonesia’s workforce , many of whom lack access to formal financing and are still recovering from the impact of the pandemic.

Among the myriad of benefits offered by BukaTabungan, Bukalapak said the convenience of opening an account in as quickly as five minutes, no administrative fee for savings, up to 20 free transfers and cash withdrawals per month, as well as higher interest rates on savings. “BukaTabungan users can also enjoy several promotional offers until the end of October 2022, including bonus interest of up to 7% on savings, direct cashback worth Rp 100,000 for each successful account opened, a special referral programme for Bukalapak users, and special discounts for Bukalapak and Mitra Bukalapak users,” the statement reads.

Bukalapak’s president for commerce & fintech Victor Lesmana said,  “BukaTabungan will be an interesting product because now, everyone in Indonesia within all levels of society will be able to access world-class digital banking services seamlessly and securely. We are very excited because this is in line with our mission to support the growth of MSMEs in Indonesia and continue to expand financial inclusion across the country.”

Unlike Singapore, Malaysia and Hong Kong, Indonesia doesn’t have a dedicated digital banking license. Instead, the financial regulator introduced new rules back in 2021 to facilitate the introduction of digital banks through acquisitions. Among the new regulations, the OJK now allows digital banks to be completely branchless, or totally online, but they are required to have a registered headquarters in Indonesia. Digital banks can either be established from the conversion of a traditional bank or as a new entity.

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