2. • What do you believe are the greatest challenges facing the sector or
industry you would like to specialize in at IE?
• Financial Institutions / Banking.
• What role do you hope to be able to play in this sector or industry in
the medium term? .
Essay No. H
Sector or Industry I like to specialize in at IE
3. • The main economic challenges that are expected to persist in 2016:
a) Further monetary tightening in the USA
b) China's economic slowdown
c) Low commodity prices.
• The main banking challenges :
a) Driving business growth
• Slow Loan Growth 10% - 15% (Average Loan Growth in Indonesia 21.41% based on 1981-2015 yearly reports by
Bank Indonesia)
• Increasing NPL from corporate and SME loans due to volatility and uncertainty on new policy direction.
b) Increase in regulatory requirements
• BASEL III implementation (liquidity requirements and the use of foundation or internal rating based approach).
• Foreign Account Tax Compliance Act (FATCA) is being implemented by banks.
c) Margin pressure
Rupiah continues to be under pressure
BI Rate is expected to increase
Which causes Net Interest Margin (NIM)
to remain the same and may even be tightened.
Indonesian Banking Greatest Challenge
4. • Top 3 Risks for Indonesian Banks:
a) Credit Risks : the possibility of increase in NPL.
b) Liquidity Risk : Lack diversification of funding base through Current And Savings Accounts (CASA).
c) Operations Risk : Increase in the banks’ intermediary role and heavy reliance on manual process.
• Preparation Stage on branchless banking initiatives by OJK (Otoritas Jasa
Keuangan /Indonesian Financial Services Authority.
• Mortgage and unsecured personal loans as the key drive growth
a) Strong GDP growth over the past years (4.73%)
as the catalyst for a growing middle-class in Indonesia.
b) Indonesia is a world’s fourth largest middle class with
17.3 million households as of 2014 .
c) Potential target market in the consumer banking space.
• Top priority investing in internet and mobile banking
a) Fee-based income from digital channels is now considered as the main area of focus for growth.
b) Currently only up to 25% of the customers transactions are processed through the internet and mobile
banking.
Today’s Situation on Banking Operations
5. • Investing in technology for digital channel expansion is a key
activity. Technology will be a critical factor in reaching new
customers without the branch network expansion costs enabling
banks to be more efficient to meeting customers' increasingly
demanding needs.
• Competitive reach is no longer determined by branch networks,
rather by banking licenses, technology and advertising budgets.
• Banking the unbanked (urban and rural) will become a primary
policy objective in both developed and emerging markets. (64%
unbanked population on 2014 based on Institute of International
Finance).
• Automation initiatives to reduce the manual processes as the main
emphasis of strategies to manage operational risk. Information
technology will play a crucial role in supporting the operations of
banks.
• Enhancement of the loan monitoring system and approval process
to manage Credit Risk.
Banking Operations Outlook in 2020
6. • Post MBA, Return to Bank Mandiri (Largest Bank in Indonesia) and aim to
be Head of Credit and Trade Operations Group (CTO).
• Create eCredit & Trade Processing System (eCTPS) as the first one
automation initiatives to reduce the manual processes in loan monitoring
system (to manage operational risks and credit risks).
• Drive 500+ employees to implement eCTPS bank wide.
• Reduce processing time, minimize delayed transactions, reach 40%
unbanked potential market (which is a growth from 64% unbanked
population on 2014) and shorten the funding gap between deposit and loan
growth.
• Contribute to Mandiri’s vision of becoming ASEAN’s largest bank by 2020.
Mid-Term Impact (up to 2020)
7. • After spending five years at Mandiri, I seek an opportunity to become a
Chief Executive of Banking Supervision in Indonesian Financial Services
Authority.
• Here I create flexible and sustainable regulations to spread eCTPS
nationally and bolster my country’s economic development in unbanked
population.
• I have this aspiration due to less clarity on Indonesian Financial
Institution regulations that need the most attention from the regulators.
• With this role, I hope to attract foreign direct investment in Indonesia.
Long-Term Impact