Essay Presentation for IE Business School IMBA 2016

1. Ratih Ayu Pramesty
Candidate from Indonesia
IE IMBA 2016 ESSAY

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