Bank Syariah Indonesia’s (BSI) focus on tech disruption is not typical for a state-owned lender. But southeast Asia’s biggest and most populous economy is proving fertile territory for startup finance.
BSI is not only lending to innovative small and medium-sized enterprises, it is also actively inviting disruptive technologies to shake up its internal operations. It is increasing investment and expertise in artificial intelligence, big data and cloud computing, and is turning its commitment to cybersecurity into a business line of its own.
In 2021, at the height of the pandemic, the bank opened a digital branch office in the Tower Building in central Jakarta. Customer service representatives there now showcase the latest BSI’s apps, online platforms and the range of digital devices that are making physical branches largely unnecessary. Along with self-service kiosks, customers can use the bank’s cash-recycling machines.
President director Hery Gunardi explains that cutting-edge tech is the way that BSI will remain an Islamic finance leader in the country. A key element of this strategy is to steadily grow Indonesia’s Islamic ecosystem to help drive economic growth.
Particular BSI initiatives include increasing Islamic financial literacy and finding innovative ways for its digital ecosystem to interface with mosques and educational and health institutions, as well as manufacturing industries.
In late 2021, the bank pioneered LinkAja Syariah, Indonesia’s first e-money medium based on Shariah principles. Transaction volumes grew rapidly in 2022, incentivizing peers to devise their own e-money offerings.
BSI’s performance reflects this success. In 2022, it announced the biggest-ever net profit in Islamic banking in Indonesia – Rp4.26 trillion ($289 million), a nearly 41% year-on-year increase.
The bank’s ambitions are even larger. Currently, BSI ranks 14th among the world’s Islamic banks. By 2025, it aims to be in the top 10.
In 2022, BSI announced the biggest-ever net profit in Islamic banking in Indonesia – a nearly 41% year-on-year increase
Accelerating BSI’s digital journey is crucial to that growth. In 2022 alone, the bank saw a 39% increase in mobile app users to 4.82 million. The related transaction fees mean that growing the use of e-channels is a priority. The plan is to position BSI Mobile as a one-stop solution for customers across all segments, using financial, social media and religious inducements.
Sustainable financing programmes are also a priority. In 2022, green financing to date reached Rp51.15 trillion. Along with implementing the green building concept internally, the bank is funding sustainability programmes in Ache and providing plastic recycling machines around the Indonesian archipelago.
