Bank Rakyat Indonesia is the world’s largest micro lender. (ID Photo/David Gita Roza)

Indonesia's Largest Bank Eyes Fresh Fintech Acquisition


JUNE 30, 2019

Jakarta. Bank Rakyat Indonesia, the country's largest lender by assets, is set to acquire a fintech company as part of its expansion to become an integrated financial services company. The bank has already taken over insurance firm Bringin Sejahtera Artha Makmur this year. 

Fintech will add to BRI's list of subsidiaries that now includes a life insurer, a small and medium enterprises bank, a digital payment service, a securities firm and a venture capital. 

"We cannot limit ourselves. The opportunities are there to penetrate not only the banking, securities and insurance sectors. We can also go deeper into fintech," BRI vice president director Sunarso said on Friday. 

Sunarso did not say which fintech the lender has set its eyes on. Through its venture capital BRI Ventura Investama, BRI already has an interest in LinkAja, a digital payment platform used by several state-owned enterprises. 

Sunarso said BRI will increase its stake in Fintek Karya Nusantara (Finarya), the company behind LinkAja, by buying up 19-20 percent of its shares currently held by Indonesia's largest cellular operator Telkomsel. 

Sunarso said the lender is not worried bt the possibility that the new fintech company it acquires will cause conflict with LinkAja. "If that happens, we can always consolidate. It will be easy since they're under the same owner," he said. 

Indonesia's fintech industry has blossomed in the past few years, thanks to the Financial Services Authority's (OJK) welcoming approach to accommodate new companies involved in digital payment services, peer to peer lending, digital financing, electronic trading, cryptocurrency, etc.

In digital payment alone, Morgan Stanley estimated fintech will process around $50 billion in transactions in 2027, up from $3.4 billion last year. 

Sunarso said BRI will provide a substantial fund for the fintech investment. 

"BRI provides Rp 3 trillion to Rp 5 trillion [$212-354 million] for corporate action. That's a normal amount for inorganic growth. But we can't say the exact number [for the fintech acquisition]," he said. 

"We've already submitted the plan to the OJK. They will check whether it will disrupt our capital structure or not. If not, and we get their go-ahead, we will include the plan in our business plan," Sunarso said.

Indonesian lenders need to submit their business plan by November each year to Bank Indonesia, the central bank. 

Sunarso said BRI is also still open to the possibilities of acquiring another bank. "We will see which ones can give added value for BRI," he said.

BRI now controls two lenders, Islamic-compliant lender Bank BRI Syariah and small-sized lender Bank Rakyat Indonesia Agroniaga.

It also has a 91 percent stake in life insurance service BRI Life.

At the end of last year, BRI also acquired a 67 percent stake in security firm Danareksa Sekuritas for Rp 447 billion and a 35 percent stake in Danareksa Investment Management for Rp 372 billion.

BRI also has multi-financing arm BRI Multifinance and money transfer service BRI Remittance.