Jakarta. Niken Larasati, 25, diligently saves money but it seems her bank savings will not grow as she had imagined. She can see the money disappearing instead.
Being an employee at a construction firm in Jakarta with a monthly salary below Rp 10 million ($700), Niken puts her money into five current accounts – each for a different purpose, such as daily necessities, education, monthly income and for supporting her family.
"I put my money into several savings accounts to divide how much to use and how much to put aside. But what the banks deduct in the form of service fees has made my savings decrease, even when I don't use them," Niken told the Jakarta Globe on Sunday (01/04).
To maintain the accounts sets her back Rp 690,000 a year. With the same amount of money, she could pay for a return flight to her hometown, Palembang in South Sumatra.
"Since I was a child, my parents and teachers have been telling me to save all my money in a bank for the future, quoting a proverb that 'a penny saved is a penny earned.' Unfortunately, they did not tell me about the fees," Niken said.
For most Indonesians, whose average monthly income is around Rp 3 million, putting money in bank accounts could be a losing proposition.
With fixed banking fees, erosion of the savings balance is particularly likely in the case of those on the lower end of the income spectrum. No wonder half of Indonesia's adult population still keeps money stashed at home.
A year and a half ago, President Joko "Jokowi" Widodo addressed the problem and called on domestic banks to cut their fees to let more people in the country benefit from financial services.
"I still receive complaints about administrative fees charged by banks. Sometimes, when customers have small amounts of money in their savings accounts and cannot increase it, their savings would be decreasing due to the fees. Please pay special attention to administrative fees for savings," Jokowi said at the time.
Even before that, the government had identified fees as one of the main reasons Indonesians do not use banking services. In 2010, it launched TabunganKu (My Savings), a program that introduced generic savings accounts with zero fees and a minimum interest rate.
All major lenders now participate in the TabunganKu program, but it comes with handicaps, such as a lack of access to automated teller machines, no internet banking services, or a requirement for customers to make all transactions at the banks' branches, making it difficult for customers to adopt the government's saving product.
TabunganKu brochures are often stacked below other leaflets advertising different savings or loan services, as if the banks do not want them to be seen.
"Banks choose not to offer the TabunganKu program openly, as they make little revenue from it," Tejasari Asad, former banker and director of Tatadana Consulting, an independent financial planner, told the Jakarta Globe.
"The small amount in customers' savings [gathered by TabunganKu] discourage banks to widely offer it … they'd rather spend [their marketing] resources on other [banking] services," he said.
TabunganKu drew in Rp 31 trillion for banks since 2010 until last year – a small fraction compared with the Rp 3,608 trillion from the banks' total customer savings in time deposits and savings accounts. It also missed Bank Indonesia's target of Rp 50 trillion by 2016.
Hoping that banks will give up their fees is futile. Over the past two years, several local lenders have increased their administrative or transfer fees, citing an increase in overhead costs. They are now even more reliant on fees for their revenue, to make up for sluggish loan growth.
Lenders' combined fee-based income has grown 8.9 percent to Rp 69.5 trillion in 2017 from a year earlier. Net interest income, derived from lending customers' deposits to other clients, grew only 5 percent over the period to Rp 358 trillion.
"Banks are having a hard time in gaining profit from net interest, as it faces bad loans and slow lending growth – they were too aggressive when commodity prices were high," said Bhima Adhinegara of the Institute for Development of Economics and Finance (Indef).
But lenders can be sure of one thing: making money from fees – administrative fees, transfer fees, provision fees and fall-below fees. And it is indeed a lucrative business.
The ubiquitous Bank Central Asia (BCA) – Indonesia's most valuable lender – made almost Rp 3.6 trillion from administrative fees on its customers' savings accounts in 2017. That was more than enough to cover the interest it had to pay to those accounts, and it was still left with nearly Rp 1 trillion to spare.
From the customers' perspective, however, fees will almost certainly eat up any interest payment.
Even for an Indonesian fortunate enough to have a monthly bank balance of Rp 10 million, maintaining it is still a tricky affair.
Typical savings accounts in Indonesia offer annual interest rates of up to 2.25 percent. At this rate, the customer would make Rp 3,700 a month before tax. It is only a fraction of the fees charged by BCA (Rp 15,000) or the country's largest bank, Bank Mandiri (Rp 12,500).
On top of that, there is a transfer fee of Rp 6,500 when customers send money to other domestic bank accounts, and a withdrawal fee of Rp 7,500, when they use ATMs of other banks.
Ririn Kusuma, a 33-year-old Jakarta-based researcher, used to be in a similar position as Niken. She kept several bank accounts until she noticed her money was gone for no good use.
"I calculated that I'd need to keep the balance at one bank at Rp 30 million a month, so that the fees do not eat up my money. It just doesn't make sense, considering I could put that sum into mutual funds with a higher rate of return," Ririn said.
She then closed all her savings accounts on which fees were charged and kept just those with no monthly fees.
CIMB Niaga, the local unit of Malaysian bank CIMB, charges no fees on its Islamic savings product and also offers TabunganKu with access to ATMs and internet banking, making it no different from its regular saving products.
Last year, DBS Indonesia launched its one-stop digital bank Digibank, which does not charge any fees on transfers and withdrawals. The Danamon Lebih program by Bank Danamon also charges no monthly administrative and withdrawal fees.
Even putting money in digital wallet services such as Go-Pay, GrabPay or Ovo is now more beneficial than putting money into conventional savings accounts and they also offer the same digital payment services.
While they do not pay interest, customers can be sure that their meager Rp 10,000 balances will remain there at month's end, because there are no fees.
New financial technology firms can also help those who want to transfer money free of charge. Fliptech Lentera Inspirasi Pertiwi, the company behind Flip.id, offers free bank transfers between domestic banks. It can do so by acting as an intermediary, taking advantage of the fact that there is usually no fee on transfers between two accounts in the same bank.
The application, licensed by Bank Indonesia, has helped more than 150,000 clients who have transferred more than Rp 1 trillion since its introduction in 2016.
Ipotpay, a financial platform created by Indo Premier Securities, comes with a more attractive offer. Thanks to its integration with money market funds, it charges no fees and has higher interest rates compared with those offered for time deposits.
"As banks are no longer a place to save money, but rather a wallet for transactions, people who want to increase their savings need to put them elsewhere," said Eko Endarto, a financial planner at Finansia Consulting.