How Digitized Customer Journeys Can Help Indonesian Banks Win Hearts, Minds


FEBRUARY 10, 2017

Indonesian banks have heard the digitization message, and they get it. They are cognizant of the untapped market opportunity in the country, given that the total number of internet users has increased to 100 million, or 39.2 percent of the country's total population. Despite this, few institutions have fully embraced digitization.

While most have some degree of online and mobile banking presence, functionality is often scattershot and limited to the front end. Research by the Boston Consulting Group (BCG) found that only one bank in five offers processes that are digitally accessible from beginning to end. While the front end of a transaction may be online – a would-be borrower, for example, might be able to submit a preliminary loan application online – further steps still require paperwork and in-person visits to physical branches, in a process that may take weeks.

In a market that expects real-time responses, this scattershot approach frustrates and alienates customers. To materially improve the quality of the customer experience, banks need to do four things:

Customer-Centric Design Practices

This begins with understanding how customers need and want to use banks' services. Through ethnographic research, where teams study customers at home and at work to see not only how they use banking services, but also how they use technology and interact with other service providers, banks can identify journeys that matter most to their customers and innovate around those.

Such an innovative service was recently introduced by Bank Danamon Indonesia. Its Sosmed D-Cash feature, available through the D-mobile application, allows users to transfer funds via Facebook to both Danamon or non-Danamon customers.

Redesign Processes

Crafting journeys that deliver a step change in value takes and end-to-end, customer-centered digital mindset, integrated data analytics, dematerialization – where smart technologies replace the need for physical assets – and progressive introduction of machine learning and robotic execution. Process redesign efforts should encompass both front-end and back-end transactions, to ensure that customer has one streamlined, consistent experience.

A good example is Panin Bank, which has launched an innovative multi-channel digital banking experience for its customers to manage their financial lives with speed, security and simplicity. Not only has the bank improved the online banking experience for its customers, featuring a user interface that combines common banking facilities on a single screen for easy access, it has also introduced, through its mobile application, the ability to manage regular bill payments, mobile credit top-ups as well as the ability to set up recurring transactions, including receiving notifications for transactions in-app and via text messages.

The combined online and mobile service offers real-time activities anytime, anywhere with multi-factor security controls – a true representation of end-to-end process redesign.


Best journeys embody a bold aspiration. Creating them takes thinking outside existing norms and gaining inspiration for practices in adjacent sectors and breakthrough technologies. When one bank reimagined the home valuation process, for instance, it challenged its design team to look at robotic process innovations that could approximate a property's value faster and more cheaply than a human by automatically addressing and comparing property records along with other real estate data.

Bank Mandiri invested $10 million in big data technology in 2016 to enable it to make loan creditworthiness decisions based on behavioral data and spending habits as opposed to the legacy approach of assessing applicants based on static data, such as monthly income. The bank has started to revolutionize its business through Big Data – including how loans will be channeled and how the risks will be managed.

Transcend Organizational Silos

Designing and building end-to-end customer journeys require collaboration across business, technological and operational functions. Different reporting hierarchies in cross-functional teams, as well as rapid and agile imagination waves, may require new skill sets, talent, performance incentives and metrics, all of which can diverge markedly from traditional ways of working.

To support this collaboration and scale innovation across the enterprise, banks can rely on a variety of sources, including centers of excellence, innovation labs, venture funds, activist program management offices and strong senior management support.

The global study by the BCG suggests that some banks, which took these steps, increased their revenues by 25 percent and their productivity by between 20 percent and 40 percent.

Indonesian banks that have not already started this process, should be asking themselves whether it is time to do so now. If a bank is not certain, it should start by looking at the potential value of embracing the digital journey, including both avenues for growth and the potential for cost and operating efficiencies.

Next, they should take a realistic inventory of their in-house tools and technology, including personnel, and identify areas for investment and potential partnerships with external service providers.

Finally, banks at all stages of this process need to develop and maintain a clear vision of what success will look like. The customer-centric journey will demand different reporting methods, metrics and performance incentives. With those will come new internal dynamics and major cultural change, which senior leadership must agree to and direct.

Ultimately, even governance and operating models may change. Banks that embrace the shift, re-imagine the most important customer journeys, employ digitization and customer-centric design principles and reshape their organizational practices, will significantly outpace their slower-moving peers. Others must catch up or be sidelined.

CF Ong is a partner and managing director of the of the Boston Consulting Group's Kuala Lumpur office. Edwin Utama is the head, partner and managing director of the BCG's Jakarta office.