Banks to watch in 2013, Bank BTPN

Bank BTPN is purely focused on the mass market in Indonesia, a segment that holds huge opportunities as the country’s economy and domestic consumption continues to grow.

Unlike other commercial banks in Indonesia that are tapping the ‘bottom of the pyramid’ – the segment in Indonesia that is expected to grow the most – BTPN does not do corporate or wholesale banking. And the bank is not just focused on micro lending, but the whole of the mass market.

“Within the mass market there are different segments with a promising future,” says Jerry Ng, president director of BTPN.
BTPN was established in 1958 by former military generals who created a bank specifically for military retirees and its pension lending offered a legitimate alternative to money lenders, says Mr Ng.

With a pension loan, the customer is able to borrow against the future income of their pension. The loans can be for a period of up to 120 months and the maximum loan amount is Rp300m ($31,000). The loan is then repaid in fixed instalments, which are deducted from their pension payments.

Of this segment, Mr Ng says: “Just because they are pensioners, it does not mean they are no longer productive.” In many cases, he adds, the pensioners are relatively young, and in the case of military retirees they can be as young as 45.

“We should look at people who are retired and find ways to empower them,” says Mr Ng. “Our branches are very different from most bank branches; we convert the branches so they become community centres. Only a small portion of the branch is used for banking.” Such bank branches organise seminars on topics such as business management. “We are building the entrepreneurial capacity of these retirees,” adds Mr Ng.

Five years ago, 100% of the bank’s lending was pension loans, but Mr Ng estimates that pension loans now account for 70%.

In 2009, BTPN launched its micro and small business banking services, and at the end of 2011 micro loans accounted for 22% of the bank’s total loans. With micro loans totalling Rp6800bn, this was a growth of 46% in the micro segment when compared to the year before.

For BTPN, however, the bank is not simply focused on lending out money. Also in 2011 the bank launched ‘Daya’, which means ‘empowerment’ in Indonesian, a programme that seeks to increase the potential of the mass market and promote health and wellness, growing businesses and communities.