Currently, many digital banks are circulating in Indonesia. The bank has quite a lot of enthusiasts especially during the pandemic, everything has become completely online. With the existence of digital bank, Indonesians only need to provide cellphones and internet quotas to enjoy bank facilities as in general without having to leave the house.

According to Sedata, “Digital bank has existed through two patterns. First, banks transform business models, strategies, and products. Then the second one is a bank that was originally formed as a digital bank, “said Deputy Commissioner of the OJK Institute and Voluntary Digital Finance Batunanggar.

But until now, the first pattern is the pattern that has always been used in digital banks operating in Indonesia. Many digital banks that use this first pattern are Jenius owned by Bank Tabungan Pensiunan Nasional (BTPN) which started serving customers in 2016, Tyme Digital (Bank Commonwealth), digibank (Bank DBS Indonesia), and Wokee (Bank Bukopin) which emerged in 2017.

Nyala (OCBC NISP) and TMRW (UOB Indonesia) also use the first pattern throughout 2020. Then three digital banks with the second pattern are also preparing to serve the public. Meanwhile, in early 2021 the BCA bank started operating. Bank Digital BCA was formed by the acquisition of Bank BCA of all shares of Bank Royal valued at Rp. 988.04 billion at the end of last year.

Bank Jago was formed after former President Director of Bank BTPN Jerry Ng and founder of Northstar Group Patrick Walujo acquired 51% of Bank Artos shares. Bank Jago has also issued new shares or rights issues of around Rp 1.34 trillion for infrastructure development, information technology, human resources, as well as improvements to the capital structure.

With the entry of Gojek, the digital bank (Bank Jago) became increasingly visible. By providing GoPay services, 22% of Bank Jago’s shares have been purchased by the decacorn. Bank Jago will become a digital ecosystem with the Gojek Group. Meanwhile, after the legalization of financial technology (fintech) startups to become the largest shareholder of Bank Yudha Bhakti in the middle of last year, Bank Neo Commerce was formed. Alipay is part of digital finance from China (Ant Group Financial) which holds Akulaku shares. Regarding the development of the second pattern of digital bank in Indonesia, it is still said to be lagging behind other countries. Reflecting on Hong Kong, eight digital banks have been operating since the country’s monetary authority (HKMA) opened a license registration last year.

ZA bank is one of the banks that can offer a maximum deposit interest of 6.8% for three months for deposits of up to Rp. 175 million. Several digital banks that have operated in other countries, for example, are Volt Bank in Australia, Jibun Bank in Japan, KakaoBank and K Bank in South Korea, WeBank and MYBank in China, and Monzo Bank in England.

However, business-related to digital banks in Indonesia will remain bright considering the number of internet users in this country continues to grow. The number of internet users itself has reached 196.7 million in 2019, the data is sourced from the Indonesian Internet Service Providers Association (APJII),

This of course makes more and more digital finance service users in Indonesia. For example — AppAnnie, recorded monthly active users (MAU) of domestic mobile banking during January-September 2020, increasing by 44% on an annual basis. Therefore, digital bank has a high potential to attract more customers. Digital banks are also able to compete with fintech businesses, as quoted by CNN Indonesia. This can happen because according to him digital banks have services that are easier, faster, and more flexible, like what fintech does today. Even so, digital banks excel in providing a variety of services similar to conventional banks, not just loans or payments.

According to what Aviliani said, digital banks also have an excellent ecosystem to raise funds, this is certainly different from fintech which needs to collaborate with banks to present this ecosystem. “They (fintech) do not have an adequate ecosystem to cover operational costs. The funds are still from banks because they cannot raise funds from savings, but from investors, “said Aviliani.

But what are the challenges that will be faced by digital banks?

1. The first is related to the undetermined rules regarding the digital bank. Digital banks currently still refer to the Financial Services Authority (POJK) Regulation Number 12 of 2018 concerning the Implementation of Digital Banking Services by Commercial Banks. Even though digital banks themselves have new features, such as opening accounts that can be done verbally, and regarding user security data.

2. The second is that it is not yet available regarding the existence of adequate data protection and data security regulations. This can result in the misuse of user data by irresponsible third parties. The National Cyber ​​and Crypto Agency (BSSN) reported that the most attacks on internet sites, information gathering, and trojans were found in January-July 2020. The total cyber attacks reached 189.9 million during that period.

3. The third is that Indonesian people’s finances are still low. In the 2019 National Survey of Financial Literacy and Inclusion (SNLIK), 38% were related to national financial literacy. When viewed based on the financial services sector, banking itself has the highest percentage with 36.1%. However, there is still a lot of space that has not been filled with knowledge and beliefs regarding financial services. By looking at the opportunities and challenges that exist, digital banks in Indonesia need to pay more attention to security in the financial services that will be provided.