In a seminar held at the Dewantara College of Economics in Bogor on 29 July 2023, the author explained the role of financial technology in the banking system. There are at least three roles of technology in the banking system, namely: e-banking, smart sales, and digital branches. The question is, will savings and loans of cooperatives also be implementing banking system in term of financial technology (fintech)?
Before answering this question, first of all we explain how e-banking, “Lakupandai”, and digital branches operate in the banking system. E-banking is a product designed for online banking purposes that allows customers to have easy and secure access to bank customer accounts. The term is, utilizing electronics for banking services. E-banking is a safe, fast, easy, and efficient electronic service that allows customers to access bank accounts and perform online banking services, 24 hours a day, and 7 days a week. Fast, because there is no need to go to the bank office which is quite time-consuming to carry out banking services. Easy, because the operation is very easy. Efficient, because there is no need to incur costs for banking services, such as transportation costs, parking fees, etc. With this service, customers save time by carrying out banking transactions anywhere and anytime, from home or office, all that is needed is internet access.
Apart from e-banking, financial technology has also given rise to an innovation, namely LAKUPANDAI. Lakupandai is also called an official financial service. Lakupandai uses agents to carry out banking transactions such as savings and transactions. One of Lakupandai’s goals is financial inclusion. This means that financial services can be enjoyed by all levels of society wherever they are, both in urban and rural areas, both in busy places and in remote areas. There is a story from one of the Lakupandai agents in Papua. Her name is Hamsinah, a BRI intelligence agent in Merauke. Hamsinah said, “At first, no one believed that there was a ‘bank’ in my house, it turned out that when someone wanted to transfer and it was successful, many people believed. In the middle of the night, if I ran out of credit or wanted to make a deposit, I still opened the door. There are no holidays on Saturdays and Sundays.”
As of March 2022, 35 banks have participated in the Lakupandai program. 1.45 million Lakupandai agents have distributed microcredit of IDR 3.8 trillion. Banks that have launched the Lakupandai program include PT Bank Rakyat Indonesia (BRI) in Papua, PT Bank Mandiri Tbk in Makassar, PT Bank Tabungan Pensiunan Nasional Tbk (BTPN) in Lubuk Pakam, North Sumatra, PT Bank Central Asia Tbk (BCA) in Grobogan, PT Bank Negara Indonesia Tbk in Bima, and PT Bank Tabungan Negara Tbk in Palangkaraya.
Apart from e-banking and Lakupandai, the digital branch is also an application of financial technology in the banking system.
What is a digital branch (digital branch)? In simple terms, a digital branch is a branch that combines a physical bank branch with advanced technology. It includes self-service kiosks, integrated front-end services, video cash registers, and digital interactive walls. Digital branches allow customers to carry out banking transactions and access banking services remotely, without having to visit a physical branch. Digital banking has become increasingly popular in recent years due to its convenience and utility, especially during the COVID-19 pandemic.
PT Bank Mandiri Tbk has launched 241 digital branches often called smart branches simultaneously in Indonesia. Smart Branch is designed to accommodate customer needs based on the level of digital adoption by providing a service process that is integrated with digital channels and self-service machines. Smart Branch is designed in three types, namely: Digital Box, Hybrid Branch, and Upgrade Branch.
Digital Box is aimed at customers who need fast and practical banking services. This is because it is equipped with self-service machines such as a Deposit Withdrawal ATM and Customer Service Machine (CSM), as well as a Video Conference Box which allows customers to interact online with Bank staff. As you can imagine, all customer needs are served by machines. Customer service (CS) in banks, which is generally face-to-face communication, has transformed into a CS machine. Customer interactions with bank staff are served via video conference box.
Meanwhile, Hybrid Branch is used by customers who need complex and digitalized banking services. Hybrid Branch provides various digital equipment such as ATM Deposit Withdrawal, CSM, Video Conference Box, and General Bankers which provide financial product solutions, digital banking education, and other banking transaction services.
The last type of smart branch is the upgrade branch. Branch upgrades are intended for customers who need banking services, but still need assistance from the General Banker in completing the required services. Upgrade Branch has a special digital service zone adjacent to the conventional service zone, so customers can try transactions in the digital zone to start getting used to the digital banking experience.
Cooperative Digitalization
Answering the question, will savings and loan cooperatives also imitate banks in implementing financial technology (fintech)? According to the author, Yes. Cooperatives will imitate banking in implementing fintech. In the future, the digitalization of cooperatives is only a matter of time. This is what is then called digital cooperatives. What is meant by the digital cooperative is a cooperative that utilizes digital technology in all its activities, such as managing data storage, financial management, product marketing, and developing product innovation. Some other definitions include: Digital cooperatives are systems designed to facilitate transactions and cooperative management. Digital Cooperatives are cooperatives that have been integrated with technology so that they can be accessed online by everyone. Digital cooperatives are a new system that functions to facilitate transactions, and management and expand the reach of cooperatives in the millennial era. There are several more definitions regarding digital cooperatives. In short, digital cooperatives are cooperatives that utilize digital technology to serve their members.
One of the cooperatives that has used digital technology is the “Benteng Micro Indonesia (BMI)” Islamic cooperative. The name is BMI Mobile. On BMI Mobile, members can view savings and DOIT balances. DOIT is a web-based system that can be used to make payments to fellow BMI members. BMI Mobile’s main services are Scan QR, transfer menu between cooperative members, payment for shopping, payment of zakat, infaq, alms and waqf (ziswaf), and transfers from BMI Mobile to the bank. Apart from that, there is also a savings menu, including savings and deposits. There is also a financing list, to check whether extraordinary financing made by members has been paid off or not. Now there is the first digital cooperative funding platform in Indonesia. The name is kelp. id. Will other digital cooperative funding platforms emerge? The author believes readers have the answers.
Author: H. Hendri Tanjung, Ph.D
Source: PELUANG Magazine, August 2023 edition