Branch Banking is at the center of BCA business in providing transaction and payment settlement services as well as commercial & SME lending
448 T
Rp
Current and Savings Accounts comprised 75.1% of total third party funds Third Party Funds
132 T
Rp
Commercial & SME Loans comprised 38.1% of total loans
Commercial & SME Loans
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(in billion Rupiah)
2013 219,738
86,591 103,157
2014 107,419
228,993
111,494
Current Accounts Savings Accounts Time Deposits
(in billion Rupiah)
2013 47,673
73,044
2014 49,387
82,919
Small and Medium Enterprise (SME) Commercial
Branch Banking is at the center of BCA’s business activities in providing transaction and payment settlement services as well as commercial & SME lending. While the Bank continued to strategically expand its branch network to provide broader access and better service for the Bank’s growing customer base, BCA’s electronic delivery channels have played a major role in recent years in transaction banking. This role has been enhanced by the rapid development of technology and electronic communications.
BCA has consistently been in the forefront in developing the accessibility of electronic banking network, including Automated Teller Machine (ATM), Electronic Data Capture (EDC), point-of-sale for pre-paid Flazz card use, and in improving internet and mobile banking services. BCA’s priority is to maintain the convenience, safety and reliability of banking services through disciplined investments in electronic networks and banking infrastructure.
BCA’s preeminence in transaction banking and extensive network coverage provides a solid base for the Bank to grow its commercial and SME lending across Indonesia. BCA is currently one of the leading lenders in Indonesia in the commercial and SME segment. BCA’s overall loan exposure to this segment represents the largest portion of BCA’s total loan portfolio.
Transaction Banking
BCA is the leading transaction bank in Indonesia, with 13 million customer accounts, 1,111 branches, 16,694 ATMs and hundreds of thousands of EDC machines, as well as robust internet and mobile banking services. BCA focuses on strategically expanding the Bank’s multi-channel network to capitalize on high potential growth opportunities in Indonesia. The Bank also works to optimize client comfort and provide financial services that cater to the needs of the Bank’s growing customers in both the individual and business banking segments. One of the Bank’s strategies to manage the rapid increase in transaction volume is to promote the use of low- cost electronic banking services.
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In 2014 the Bank continued to expand its merchant network, adding around 80 thousand new EDC machines at selected merchants with high frequency of payment transactions. This ever-increasing number of EDC units includes installations of Flazz card machines to capitalize on the high frequency of micro-payments being made in a number of strategic merchants, such as retail stores, supermarkets, parking locations and commuter trains in Jakarta.
Increasing functionality and the ongoing refinement of this multi-channel integration is an important focus of BCA to entice customers away from the branches and to the Bank’s electronic channels. Significant strides have been made in improving the integration of internet and mobile banking into a single platform through the development of BCA Mobile. From the customers’ point of view, this integrated interface has enhanced the internet and mobile banking service by providing a seamless experience across platforms.
BCA Mobile application is available on a variety of popular smartphone and tablet operating systems, including Apple iOS, Android, and BlackBerry, that are widely used by the growing Indonesian middle class.
The BCA Mobile application is equipped with “Info BCA” service which displays promotional materials, credit card application forms and the Bank’s product and service information, including smart features to determine the location of the nearest branch and ATMs for customers on the go.
In recent years BCA has seen customer preferences for transaction services gravitate towards electronic banking, a positive indication that the Bank will be able to reduce queues and thus waiting time for customers at branches during peak hours. The Bank seeks to educate its customers to use electronic banking services as a reliable, safe and convenient transaction channel. In 2014, transaction banking activities through the electronic network continued to grow with the support of ongoing network expansion and the innovation and development of transaction features. The use of internet banking and other electronic networks increased significantly in 2014 both in terms of transaction value and frequency.
The highest e-channel transaction value in 2014 was recorded in internet banking transactions, reaching Rp 5,350 trillion, up 13.1% from Rp 4,732 trillion
in 2013. The number of clients who accessed the KlikBCA Individual and Business services increased from 4.1 million customers in 2013 to 4.5 million in 2014. BCA’s ATM network remains one of the most popular means of transactions with 1,678 million transactions recorded in 2014, breaking previous year's record of 1,462 million transactions.
The electronic banking network will continue to be improved upon in order to ensure customer convenience and security in conducting electronic banking transactions. Improvements will include increasing the range of products and payment facilities and through collaboration with strategic partners. BCA also plans to develop branchless banking services to expand its reach beyond the Bank’s existing customer base, particularly in the field of payment settlement and transaction banking.
In 2014 the Bank managed to maintain its role as a leading transaction bank in Indonesia with a market share of Current Accounts and Savings Accounts (CASA) of 15.5%. BCA CASA funds recorded positive growth of 4.2%, reaching Rp 336.4 trillion by the end of 2014. Resilient CASA balances were maintained due to consistently high transaction volume and frequency catalyzed by BCA’s large number of interconnected individual and business transaction banking customers. On this basis, BCA did not
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Delivery Channels Transactions
2014 2013
Branch
Number of Transactions (in million) 179.4 186.7
Transaction Value (in trillion Rupiah) 15,110.2 15,199.8
ATM
Number of Transactions (in million) 1,678.2 1,461.5
Transaction Value (in trillion Rupiah) 1,732.1 1,540.9
Internet Banking
Number of Transactions (in million) 1,165.1 895.9
Transaction Value (in trillion Rupiah) 5,349.7 4,731.8
Mobile Banking
Number of Transactions (in million) 499.7 408.1
Transaction Value (in trillion Rupiah) 485.6 389.9
Number of Distribution Channels (unit)
2014 2013
Number of Branches (including cash offices) 1,111 1,062
Number of ATMs 16,694 14,048
choose to compete on CASA rates, thereby avoiding a CASA rate price war that could in turn lead to unhealthy market competition. It is testament to BCA’s transaction strength that CASA funds continued to grow even with unchanged and relatively low CASA rates and a notably widening gap between CASA and time deposit rates.
CASA remains BCA’s main source of liquidity, representing 75.1% to the Bank’s total third party funds at the end of 2014. More precisely, savings accounts contributed 68.1% to CASA funds while the remaining 31.9% were in current accounts. BCA is confident that stronger CASA growth will return when the Indonesian economy accelerates and commerce velocity increases in the coming years.
BCA seeks to create value-added services to meet the diverse financial needs of the Bank’s different customer segments. In addition to regular branch banking services, the Bank also provides priority banking services to individuals in the mass-affluent segment, and Weekend Banking services in specific shopping malls to serve individual and small business customers who may not be able to go to the branches during regular branch hours. Furthermore, the Bank offers Solitaire banking services for high net-worth individuals.
Tahapan BCA continues to dominate third party funds and is central to the Bank’s position as a leading transaction bank. BCA offers a range of Tahapan savings products geared to different customer segments, with features meant to appeal to each of those segments. For example, Tahapan Gold is aimed for the business segment. Meanwhile, to capture a large share of the youth market, BCA also provides Tahapan Xpresi with features tailored for the younger generation, including ATM cards customization.
In order to keep up with the evolution of contemporary lifestyles, the Bank proactively connects with customers through social media thereby providing additional communication channels and further strengthening customer relationships. BCA has been expanding its digital marketing strategies to take advantage of the country’s growing use of social networking sites. The Bank has set up several social media accounts as communication and information platforms, which have received positive responses from Indonesian netizens. Currently, BCA has close to 850 thousands social media followers and likes.
Gebyar BCA, the long established TV variety show, is now available through social media and BCA website.
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Faced with intense competition in fund raising in the midst of a rising interest rate environment and a widening gap between CASA and time deposit rates, the Bank selectively raised time deposit rates in 2014 for specified deposit amounts and tenors to further strengthen BCA’s liquidity position. Time deposits grew 28.8% from Rp 86.6 trillion in 2013 to Rp 111.5 trillion in 2014, with total third party funds increasing by 9.4% to Rp 447.9 trillion in 2014 from Rp 409.5 trillion in 2013.
Cash Management
BCA continues improving relationships with corporate and commercial & SME customers through integrated cash management services designed to facilitate the flow of funds in business transactions. By providing a more efficient process for the payment of goods and services, the Bank places itself in a strategic position within the customers’ business value chains, allowing BCA to effectively capture opportunities to acquire fee-based income and solidify stable source of third party funds.
BCA offers a number of Business to Business (B2B) and Business to Consumer (B2C) services via internet banking. In addition, the use of BCA virtual account services, one of the Bank’s cash management features, continued to increase with a total of around 1,300 companies making use of the service in 2014.
In order to optimize the provision of services to its customers, BCA maintains its cash management services in a community format, whereby groups of customers are connected to one another within a business chain from supplier to distributor. These communities include the capital markets community, futures markets community, oil and gas community, cement community, modern market community, and telecommunications community.
Various events were organized to enhance relationships with members of these communities such as benchmarking trips, workshops, dissemination and business solutions updates. BCA also organized business gatherings in a number of cities, both within and outside the country, aimed
to increase knowledge and experience as well as to strengthen relationships between community members.
In an effort to meet customer demand for a total integrated cash management solution, the Bank engages the Corporate Business Group and the Commercial & SME Division to facilitate supply chain financing and other credit facilities as key elements for cash management.
BCA Cash Management also cooperates with selected foreign banks to provide services for modern foreign- owned retail enterprises that have recently entered the Indonesian market. These enterprises include H&M, UNIQLO, IKEA and Central Department Store.
In 2014, the number of companies using BCA cash management solutions rose to more than 3,000.
In order to strengthen the infrastructure, BCA is planning the launch of its latest cash management innovation, KlikBCA Bisnis ‘Integrated Business Solution’, which provides integrated interface to connect BCA's cash management with companies’ internal cash management systems through a host-to-host network. This service is a development of KlikBCA Bisnis bringing more complete features, a better interface and a variety of other facilities, including enhanced supply chain financing. This new solution is expected to further strengthen the relationship between BCA and corporate enterprises, as well as strengthening the Bank’s transaction business and improving cash flow management and customer payment capacities.
Commercial & SME Customers
Branch Banking plays an important role in growing commercial and SME segment. Driven by growth in the commercial segment, in 2014 the commercial &
SME loan portfolio grew 9.6% to Rp 132.3 trillion from the previous year’s Rp 120.7 trillion. Commercial &
SME loan contributed significantly to the Bank’s overall loan portfolio and represented 38.1% of the total portfolio at the end of 2014.
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In line with the credit risk management policies adopted by the Bank in the midst of challenging economic conditions, commercial and SME loan growth was not as high as in previous years. BCA implemented a number of prudent lending policies, with credit facilities prioritized for borrowers showing promising prospects and those who have established good relationships with the Bank. With these measures, growth in commercial and SME loans was well-balanced with the preservation of quality, reflected in the low commercial and SME NPL ratio of 0.7% at the end of 2014.
In the commercial banking segment, the Bank positioned itself as a business partner to its customers by providing working capital loans and financing for medium-scale enterprises mainly those engaged in the trade, manufacturing and services industries with loans ranging from Rp 10 billion to Rp 350 billion.
In 2014, commercial loans grew 13.5% to Rp 82.9 trillion, contributing 62.7% to the total Commercial and SME loan portfolio.
Supported by the Commercial Business Centers, BCA is able to provide better service and ease of access in offering banking solutions that fit the needs of commercial customers. At the end of 2014, there were 14 Commercial Business Centers located in major business centers in Indonesia including in Jakarta, Semarang, Bandung and Surabaya as well as in cities outside Java including Medan, Palembang, Makassar and Denpasar. Working closely with the branches, Commercial Business Centers actively analyzes SME borrowers to find those with the potential of growing into commercial sized borrowers. In line with the expansion of SME customers’ businesses, approximately 4% of SME lending migrates to the commercial segment each year.
BCA defines the SME segment as business loans with nominal less than Rp 10 billion. In 2014, SME loans increased by 3.6% to Rp 49.4 trillion and contributed 37.3% to the total Commercial and SME loan portfolio.
BCA faces tight competition in this SME segment given that all banks are active within the segment.
Most SME customers are family businesses, shop or restaurant owners or small-scale factory owners.
Lending is done through the BCA branch network which is strategically located throughout Indonesia.
SME lending is supported by an online credit scoring system. In addition, BCA collaborates with several partner institutions, such as rural banks and cooperatives, to provide loan facilities both directly or indirectly in support of business development for those SME customers who cannot be reached by the Bank’s branch network.
Efforts to encourage business growth are made through intensive marketing in major cities by optimizing BCA’s branch network and the use of value chain financing system that capitalizes on the relationships between corporate, commercial and SME customers. BCA also continuously strengthens infrastructure, simplifies the credit processes and improves the skills and abilities of account officers in establishing strong relationships with customers.
The recruitment and training of new account officers continued throughout 2014 in order to meet the increasing demand for skilled account officers.
BCA also introduced the relationship officers program, a new initiative established to complement the role of account officers primarily in providing banking solutions beside credit facilities. Relationship officer development is consistent with the Bank’s strategic direction to build on relationship banking, increase the Bank’s funding and create cross-selling opportunities.
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Sharia Banking
In 2014, BCA Syariah continued to enhance its products and services to cater to the needs of its customers. Launched in 2010, BCA Syariah currently manages a network of 45 branches — including 23 Syaria Service Units — across Greater Jakarta, Bandung, Semarang, Solo and Surabaya. The BCA network supports BCA Syariah by allowing their customers to use the Bank’s ATM services and EDC machines. Through BCA’s transaction network, BCA Syariah also provides mobile banking services via smartphones to increase customer convenience.
For easy access to information and as a platform to submit complaints or feedbacks, BCA Syariah customers can also make use of the Bank's call center HaloBCA.
BCA Syariah is strategically positioned to complement financing services for the SME lending segment by exploring opportunities for cooperation with BCA SME business unit. In 2014, BCA Syariah introduced new investment product in precious metals for customers with low installments. As a Muslim majority country with a population of over 250 million, the sharia banking possesses promising prospects for the future.
With increased competition in 2014, BCA Syariah faced a rising cost of funds which negatively impacted its profitability. In 2014, BCA Syariah’s third party funds grew 32.8% to Rp 2.2 trillion, while total Syariah financing grew 49.9% to Rp 2.1 trillion.
Reliance on high-cost time deposit funding affected BCA Syariah’s margin in 2014 with Net Core Operating Margin decreasing to 6.4% from 7.7%. Throughout the year, focus was directed towards maintaining loan quality with the Non Performing Financing ratio maintained at a low level of 0.1%. To strengthen its business, BCA injected an additional Rp 300 billion of capital into the business in 2014.
Looking to the Future
Transaction banking remains BCA’s core business and will be maintained and developed as a foundation for growing the Bank’s other businesses. In the future, the Bank will continue to expand coverage and improve the quality of its services to provide convenience and security for customers.
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To further extend its reach at a lower cost than conventional branch banking, BCA will introduce a new branch concept with smaller physical premises and fewer staffs. These new branches will be supported by the latest electronic banking facilities.
In order to strengthen the Bank’s position in the value-chains of large customers, BCA will continue to enhance its cash management systems as a flexible solution to corporate and commercial & SME customers’ needs.
In the commercial and SME segment, the Bank will increase lending to prospective customers and continue to improve credit infrastructure. BCA will increase the number of account officers in line with business growth as well as improving their skills and abilities through training initiatives. The commercial and SME segment plays an important role in sustaining the growth of the national economy.
Leveraging off its solid position in transaction banking and extensive network, BCA is poised to capture the demand for commercial and SME lending when the Indonesian economy returns to a faster rate of growth.