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Growing Micro Finance Business
IriantoSenior Executive Vice President
Change Management BRI
MICRO FINANCE BUSINESS JOURNEY
THE FUTURE OF MICRO FINANCE BUSINESS
KEY SUCCESS FACTOR
MAIN DRIVERS
2
MAIN DRIVERS
3
4,7 4,7 4,7
5,04,9
Mar-15 Jun-15 Sep-15 Des-15 Mar-16
ECONOMIC GROWTH Q1 2016 FASTER THAN Q1 2015
National GDP Growth
4
If we want to build Indonesia's economy,then we have to build micro and small
business sector. If we solve their problems,
it means 99% of Indonesian business
issues solved
57,19 million Enterprises
(98,79%)
654.222Enterprises
(1,11%)
52.106 Enterprises
(0,09%)
5.066Enterprises
(0,01%)Large
Medium
Small
Micro
Source: Minister of Small, Medium Enterprise and Coorperative, 2012
MICRO CONTRIBUTION
Micro enterprise:- Sales: Rp ≤300 million S$ 31,000- Assets: Rp 50 million S$ 5,200Small enterprise:- Sales: Rp 2.5 billion S$ 260,000- Assets: Rp 500 million S$ 52,000
1 S$ = Rp 9,700
5
Empowering Micro Small Medium Enterprise (MSME) by providing appropriate products and services according to entrepreneurship maturity
Direct Grant
Revolving Funds
(Unfeasible & unbankable)
Subsidized Loans
(Feasible but unbankable)Fully Commercial Loans
(Feasible & bankable)
A
B
C
DFin
an
cin
g m
od
el C
om
mer
cia
l
Commercial line
Partnership LoanKKPE, KPENRP,
KUPS, KUR
Commercial(KUPEDES*, Kredit Ritel &
Menengah)
CSR *microcredit
Tabunganku(Basic Saving
Account)
Tabunganku(Basic Saving
Account)
BRI Simpedes (Saving Account)
Depobri (Time Deposit)
Girobri (Current Account)
Loan
Deposit
6
Enterprise GDP Contribution Banking Loan
December 2015 (Billion Rp)
BRI’s Loan December 2015
(Billion Rp)
5.066
52.106
57.843.615
13,72%
46,62%
39,66%
359.009
380.794
2.287.149
21.673
150.953
266.341
Medium
Corporate
Small & Micro
0,01%
0,09%
99,90% 12,58%
75,56%
11,86%
60,67%
34,39%
4,94%
57.900.787 100% 3.026.952 438.967TOTAL
*) Source: Minister of Small, Medium Enterprise and Coorperative, OJK, BRI annual report
BANKING CONTRIBUTION FOR THE NATION ECONOMY
7
Indonesia is the 4th most populated countries, and 16th biggest economy in the world, but it is at the middle amongst 148 countries in term of ICT
World Economic Forum analysis shows that there is a positive correlation between ICT readiness and economic competitiveness. There is also another research finds that every 10%
broadband penetration will positively impact on 1.21 – 1.38% GDP growth. Other research mentions that every one ICT job will create three employment in other sector. 8
Indonesia has competitive position on main infrastructure and digital content in SEA region, however it is left behind compare to other countries in the world
Source: McKinsey, Laporan Final, Telekomunikasi, Media, dan Teknologi (Maret 2015)
McKinsey proposes ten ideas to maximize socio-economic ICT impacts in Indonesia:1. Develop agenda and national ICT roadmap in-
line with Indonesia economy growth and social development priorities.
2. Remove infrastructure obstacles and improve outreach, cost and bandwidth.
3. Reduce ICT digital gap between urban and rural areas.
4. Make sure regulation and institutional framework are effectively respond ICT sector continuous development.
5. Develop up and down-streams ICT industry6. Grow number of ICT skilled-labours7. Encourage ICT usage for SMEs businesses8. Use ICT to support priority sectors9. Use ICT to improve public services10. Improve public service quality and efficiency
9
A game-changing Strategic Plan, focused on SMEs.
E-Commerce Roadmap, 31 strategic initiatives across 8 Ministries to ensure impactful growth of the Technopreneur sector. USD 130 Bio e-commerce transaction in 2020.
FDI friendly policies to attract Tech investing & founding of stronger domestic base of venture.
Facilitating greater access to funding i.e. KUR for SMEs to digitize, Venture Capital regulations.
Providing an attractive & easier exit strategy by deepening of capital market liquidity for technology listing.
Adoption of Pro Innovation Policies:
National program to create 1000 Digital
Technopreuneurs National, “Safe
Harbour” regulations to protect e-commerce players.
Government of Indonesia Programs Indonesia: The Digital Energy of Asia
10
MICRO FINANCE BUSINESS JOURNEY
11
Raden Aria Wirjaatmaja
PT Bank Rakyat Indonesia (Persero) Tbk. is the oldest bank in Indonesia. Its history was started back on 16 December 1895, when Raden Bei Aria Wiraatmaja founded a small
financial institution with the name of De PoerwokertoscheHulp en Spaarbank der Inlandsche Hoofden. The institution
was a mosque-based association, which function was to manage and disburse trusted fund to community in a very
simple scheme
16 DESEMBER 1895
12
After 120 years, BRI still focuses its business on micro and creating products and services accessible for the undeserved people in Indonesia.
13
MICROFINANCE TRANSFORMATION
BIMAS
1984 2007 2011 2014
COMMERCIALAPPROACH
GOVERNMENTSUBSIDIZED
LOAN
MOBILE OUTLET
AGENT BANKING BUSINESS
Channeling Government loan focused
on agriculture
Kupedes (micro loan)
&Simpedes
(micro saving)
Kredit Usaha Rakyat
(Government susidized loan)
Automobil Channel
(Teras BRI Keliling & Teras BRI Kapal 2015)
BRILink & T-Bank
(Branchless banking)
1969 1984 2007 2011 2014
14
WAKIL
DIREKTUR UTAMA
KONSUMERKOMERSIALKEUANGAN OPERASIONALKEPATUHAN
HUMAN CAPITAL
& MANAJEMEN
ASET
MANAJEMEN
RISIKO KREDIT KELEMBAGAAN
TRANSACTION
BANKING
KARTU KREDIT
KREDIT
KONSUMER
WEALTH
MANAGEMENT
AGRIBISNIS
BISNIS UMUM
BISNIS
BUMN 1
BISNIS
BUMN 2
HUBUNGAN
LEMBAGA 1
HUBUNGAN
LEMBAGA 2
TREASURI
AKUNTANSI
MANAJEMEN &
KEUANGAN
BISNIS
INTERNASIONAL
KEBIJAKAN &
STRATEGI
BISNIS MIKRO
PENGEMBANGAN
BISNIS MIKRO 1
PENGEMBANGAN
BISNIS MIKRO 2
BISNIS
PROGRAM,
PANGAN &
KEMITRAAN
BISNIS RITEL
& MENENGAH
MASS
BANKING
RESTRUKTURISASI
& PENYELESAIAN
KREDIT
ADMINISTRASI
KREDIT
ANALISIS RISIKO
KREDIT
MANAJEMEN
AKTIVA TETAP &
PENGADAAN
PROPERTI
PENGADAAN
BARANG & JASA
JARINGAN
SENTRA
OPERASI
LAYANAN &
CONTACT
CENTER
MANAJEMEN
RISIKO
KEPATUHAN
HUKUM
KEBIJAKAN &
PENGEMBANGAN
HUMAN CAPITAL
OPERASIONAL
HUMAN CAPITAL
PENGELOLAAN
PEKERJA
KONTRAK &
OUTSOURCING
BRI CORPORATE
UNIVERSITY
PERENCANAAN&
PENGEMBANGAN
TI
OPERASIONAL
TSI
SATELIT &
JARINGAN
INFRASTRUKTUR
OPERASIONAL
DIGITAL
BANKING
MIKRO
CHANGE
MANAGEMENT
SATUAN
KERJA
AUDIT INTERN
JASA
INVESTASI
SEKRETARIAT
PERUSAHAAN
DIREKSI & SEVP
DIREKTUR UTAMA
UKM &
KONSUMER
DEWAN KOMISARIS
TERAS BRI
KANTOR
INSPEKSI
KANTOR CABANG KHUSUS
KOMUNIKASI
PEMASARAN
JARINGAN &
LAYANAN
STRATEGI TI &
SATELIT
RAPAT UMUM PEMEGANG SAHAM
PENGEMBANGAN
PERUSAHAAN &
STRATEGI
KANTOR WILAYAH
PERUSAHAAN
ANAK*KANTOR CABANG
KCP KANTOR KAS
BRI UNIT
UNIT KERJA
LUAR NEGERI**
COMMERCIAL
BUSINESS
ORGANIZATION STRUCTURE
15
Microbanking Director
Microbanking Development Policy Division
Monitoring Microbanking 1
Division
Monitoring Microbanking 2
Division
Head Unit
Head Office
Account Officer
TellerCustomer
Service
BRI Unit
simplicity product & process
ORGANIZATION STRUCTURE
16
(S$ Billion)
Micro Loans
(Million)
• Total Micro loans increased 20.4% yoy, with number of borrowers reaching 8.2 million.
•New KUR support the micro loan growth. With outstanding reaching Rp 29.2 trillion and 1.9 million borrowers to compensate declining Micro KUR and Kupedes Rakyat
1,19 1,09 1,04 1,12 1,13
1,56 1,54
2011 2012 2013 2014 2015 Mar'15 Mar'16
3,4 3,4 3,9 4,3 4,4 4,4 4,2
1,5 0,5 1,3
1,9 2,2 2,7
3,0 1,1 2,5 0,7
0,0
0,9 1,9
5,3 5,6 6,5
7,3 7,9
7,48,2
2011 2012 2013 2014 2015 Mar'15Mar'16
New Micro KUR
New Retail KUR
Micro KUR
Kupedes Rakyat
Kupedes
Micro Loan
NPL – Micro Loans (%)
MICRO FINANCE BUSINESS - LOAN
Micro Borrowers
8,14 9,45 11,48
13,28 15,00 13,61 15,00 1,15
1,56
2,14 2,53
1,56 0,69 1,19
0,58 1,93 0,35
1,31 - 0,27
2,74
9,30 11,01
13,63 15,80
18,44 16,23
19,55
2011 2012 2013 2014 2015 Mar' 15Mar' 16
17
Kupedes Micro KUR
(government subsidized loan)Plafond <= Rp 200 million <= Rp 25 millionInterest 20% 9%Minimal business experience more than 2 years more than 6 months
Tenor 1-5 years 1-5 yearsCredit Insurance/Guarantee No Yes
KUPEDES & KUR DIFFERENTIATION
18
MICRO FINANCE BUSINESS - DEPOSIT
Micro Deposits Micro Deposits Composition
(S$ Billion)Mar’15 Mar’16
• Micro deposits grew 13.4% yoy, lead by saving with 12.0% YoY
• Savings, with composition of 83.7%, still dominates micro deposits
0,8%
84,8%
14,4% 0,9%
83,7%
15,3%
0.8%
84.8%
14.4%
Demand Deposit Saving Time Deposit
11,0813,05
15,0717,13
19,80
16,82
19,07
2011 2012 2013 2014 2015 Mar'15
Mar'16
19
TerasBRI - Performance TerasBRI - Contribution to Micro Loan & Deposit
Loan Deposit
• TerasBRI continuously shows strong performance with loan growth of 31.5% and deposit growth of 29.2% yoy.• Contribution of Teras BRI to Micro business performance keep
increasing, in Mar’16 reached 9.9% and 4.5% of total micro loan and deposit
0.9%
1.8%
3.5%3.8%
4.4%
4.0%
4.5%
2011 2012 2013 2014 2015 Mar'15 Mar'16
Deposit in Teras
3.2%
5.0%
7.6%
8.8%
9.8%9.1%
9.9%
2011 2012 2013 2014 2015 Mar'15 Mar'16
Loan in Teras
MICRO FINANCE BUSINESS – TERAS BRI
S$ Billion
2.95.3
10.0
13.5
16.9
14.3
18.8
1.02.3
5.16.3
8.5
6.5
8.4
1304
2128
2671
30673179
30783179
0
500
1000
1500
2000
2500
3000
3500
0
2
4
6
8
10
12
14
16
18
20
2011 2012 2013 2014 2015 Mar'15 Mar'16
Loan Deposit # of Teras BRI
0,3
1,03
0,55
1,39
1,74
1,47
1,94
0,10,24
0,530,65
0,88
0,67
0,87
20
# of Agent # of Transaction
(in Million)
Transaction Volume
(in S$ Billion)
32.4
83
35.9
55
50.2
59
27.6
43 5
9.3
18
Jun'15 Sep'15 Dec'15 Mar'15Mar'16 Jun'15 Sep'15 Dec'15 Mar'15Mar'16
# of Agent - Distribution # of Transaction - Distribution Transaction Volume - Distribution
In Mar’16, Java (55.0%) dominates the Agent
distribution
In line with the Agent distribution, Java dominates the total BRILink transaction
Java with 38%, dominates the
transaction volume
6,8
13,2
23,6
2,3
15,1
Jun'15 Sep'15 Dec'15 Mar'15Mar'16
MICRO FINANCE BUSINESS – AGENT BANKING BUSINESS (BRILINK) PERFORMANCE
Java
55%Sumatra
22%
Mid &
Eastern Part
23% Java
45%
Sumatra
29%
Mid &
Eastern Part
26% Java
38%
Sumatra
33%
Mid & Eastern
Part
29%
1,0
7
2,1
0
3,7
0
2,1
6
0,3
8
21
BANK WITH THE LARGEST NETWORK IN INDONESIA
22
KEY SUCCESS FACTOR
23
ACCEESSIBILITY
Outreach means the bank capability to serve more people. BRI provides widespread delivery channels in all over Indonesia to reach the unreachable.
Micro business communities are spreading all over Indonesia (more than 17.000 island). Most of micro businesses are located in rural and remote areawhile the infrastructur is very limited.
The presence of BRI provides financial solutions for the community that instill values are becoming competitive advantage to run the micro finance business sustainably.
24
SUSTAINABILITY
The bank should be self-sufficient to generate sustainable profits so that the bank can maintain its commitment to continue to serve micro segment.
In addition, the bank's profits can continuouslysupport to develop innovative products in order to improve the quality of service or even to help micro businesses improve their performance.
1960’s
2011’s
2014’s
25
SOCIAL IMPACT
Source: University of Indonesia Research
1,21
24,72
38,4
84,84
2009 2012
Asset Sales (IDR Million)
Micro Credit Impact(Rp Juta)
2.2x
20.4x
The existence of microfinance should be able to provide a significantly positive effect, both on the financial aspects and social aspects.
Recent research conducted by independent research (University of Indonesia) in 2012 showed that the presence of micro-credit has a significant impact in terms of the increase in sales (2.2x) and assets (20.4x). In average each debtor creates job opportunity for 1,17 – 2 workers.
26
THE FUTURE OF MICRO FINANCE BUSINESS
27
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
L A S Mobile
L A S
BRI’S INNOVATIVE PRODUCT & SERVICE JOURNEY
28
BANKING IS CHANGING
BANKING CHANNEL JOURNEY
29
BANKING LESS, LIVE MORE ...
30
Strengthen the traditional market community through digital service. BRI Teras Digital provides digital facilities and services for both traders and buyers to reach information about commodities & products and to conduct market
transactions digitally.
TERAS BRI DIGITAL
31
Conventional Frontliners
Transform to DigitalTeras BRI Pasar (Existing)
Self service banking (banking assistant)
TERAS BRI DIGITAL
32
Backdrop Logo Teras BRI DigitalSmart TV LED 40”
All in One (AIO) PC Touchscreen21”
EDC
TERAS BRI DIGITAL - DESIGN
33
Teras BRI Digital Pasar Bringharjo Teras BRI Digital Pasar KrangganTeras BRI Digital Pasar Gede
TERAS BRI DIGITAL
34
Product and price real time information Connecting sellers and buyers Traditional market database
TERAS BRI DIGITAL
35
ACCESSIBILITY – INNOVATION FOR FINANCIAL INCLUSION
1. Balance Information
2. Transfer
3. Top up Mobile Phone Voucher
4. Payment Points
BRILink Features:
CASH
BRILink Advantages:
Real time online Fast and easy transaction Safe by using customer PIN Variety of transactions (features and facilities) Can be accessed by any other bank ATM card users who are members
of the LINK, ATM Bersama and Prima Network
1. Cash Deposit
2. Payment Loan
3. Cash Withdrawal
1. Balance Info2. Payment and Purchase3. Transfer4. Electronic Access Code
(electronic token)5. Check Agent Validity6. Registration7. Top Up
Banking Services in BRILinkAgents
Cash Deposit & Cash Withdrawal
Payment Point (electricity, phone, loan, etc)
PurchaseTop up mobile phone voucher & electricity voucher, buy goods, etc.
Transfer (to intern al bank & outside the bank)
No need bank saving account to do transaction
36
LAS MOBILE
Loan Approval System (LAS) MobileAccount Officer is using Laptop on the spot to analyze potential customer (time & process efficiency)
37
BRI Digital Village
The concept of installing Wifi to provide high speed internet in the middle of the village. Internet would help rural people to easily reach more information
and knowledge. Moreover, various information such as education, health, agribusiness, economics, etc. would improve their productivity and even
increase their standard of living. By encouraging others to prosper, BRI actually is working to sustain and even increase its performance.
BRI DIGITAL VILLAGE
38
THANK YOU
39
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