JAKARTA – After conquering the broadcasting market in Indonesia, MNC Group founder and executive chairman, Hary Tanoesoedibjo, seeks to tap his vast media audience to fuel a new engine of growth: digital finance.
MNC is Indonesia’s largest media conglomerate, with its popular TV shows reaching all corners of Southeast Asia’s most populous country. Tanoesoedibjo told the Nikkei in an interview about his plan to develop new online banking operations by reaching the underbanked.
Founded in 1989 as a securities firm, MNC Group has since expanded into various fields, including real estate. He acquired TV channels operated by the family of late Indonesian President Suharto after his ouster in 1998.
Many of Indonesia’s major conglomerates, such as Sinar Mas, Salim and Lippo, were founded by entrepreneurs who have since passed the baton on to their children and grandchildren. MNC is part of a newer second class of business groups started in the 1980s in which the original executives, such as Tanoesoedibjo, 55, are still in the driver’s seat.
Last month, the group launched Motion Banking, an online banking only accessible through a smartphone app. Tanoesoedibjo said it aims to recruit 10 million new customers in one year and 50 million in five years by offering a range of services, from virtual credit cards to insurance and securities trading.
“We also want to synergize with our large ecosystem user base,” he said, leveraging MNC’s multiplatform audience of over 210 million.
The group’s four television channels attract over 50% of prime-time audiences and are known to produce successful programs. The weekday hit soap opera “Ikatan Cinta,” or “A Bond of Love,” regularly achieves ratings of around 50% or more.
Tanoesoedibjo discussed plans to place Motion Banking advertisements across the country during broadcasts of “Ikatan Cinta” and other programs. It is considering QR codes in advertisements at the bottom of the TV screen so that viewers can open accounts on the spot. The app will use facial recognition technology linked to the country’s national identity database to speed up the process.
With a population of 270 million, the largest in Southeast Asia and the fourth largest in the world, Indonesia’s online banking industry has sparked interest across the region. Only half of Indonesian adults have a bank account, while almost 70% own a mobile phone, giving online banking services significant room for growth.
Rivals, however, are closing in quickly. Indonesian “super app” provider Gojek announced an investment in Bank Jago as part of a capital partnership towards the end of 2020. It also announced its merger with e-commerce giant Tokopedia in May and plans to offer a range of services, particularly banking, on its application. Singapore-based ridesharing company Grab and online retailer Sea are also believed to be planning forays into the field.
And on Friday, BCA Digital, the digital banking arm of Indonesia’s largest private lender, Bank Central Asia, launched its mobile banking platform – blu – on Google Play Store, this year targeting hundreds of thousands of new customers among the youth segment. .
Taking into account the increasingly congested industry, Gary Hanniffy, director of Asia-Pacific banking for rating agency Fitch Ratings, said Indonesian digital lenders could benefit from healthy margins thanks to lower fixed costs in l ‘lack of a physical branch network – as well as the high returns paid by borrowers in the underserved segment “with little or no credit history” or collateral to be offered as collateral against the loans.
“However, we believe that the ultimate success of digital lenders in achieving and maintaining profitability will largely depend on their ability to achieve sufficient scale and effectively manage credit risk in a segment that has been primarily avoided by banks. traditional because of the high risk of default, ”Hanniffy told Nikkei Asia.
“The viability of the largely untested business models of digital lenders remains uncertain at this time,” he added.
Tanoesoedibjo, however, is optimistic about MNC’s prospects, as rideshare companies like Gojek are “present in big cities – they don’t cover the unbanked,” he said.
“The good thing about our group is that we reach everyone in the country,” Tanoesoedibjo said. So he is very convinced that MNC can be the leader of digital banking in Indonesia in terms of account numbers, as it can penetrate unbanked populations yet to operate in areas such as Papua, Moluccas, West Papua, East Nusa Tenggara and West Nusa Tenggara.
For the whole of 2020, MNC Investama, a main group member, reported net profit of 1.5 trillion rupees ($ 103 million) on total net sales of approximately 14.8 trillion rupees, down by 27% and 7% respectively. But its share price jumped in June amid rising hopes for the online banking industry.
Currently, 65% of MNC’s income comes from the media and 25% from financial services, according to Tanoesoedibjo. The goal is to achieve “40:40 in the next five years,” he said of the desired percentage ratio. In addition to television, it aims to leverage the group’s social media channels to reach a wider customer base.
MNC is also developing integrated hotel complexes in Bali and Bogor, a city near Jakarta, in collaboration with the Trump Organization. The projects, which involve golf and hotel facilities, are expected to become the Trump Organization’s first integrated hotel complex in Asia.
Tanoesoedibjo said Donald Trump Jr., son of former US President Donald Trump, was his “counterpart” on the project and that he “had just spoken to him” the week before Nikkei’s interview. The two sides signed an agreement in 2015 on joint development. But marketing material distributed in March did not mention the Trump Organization, sparking speculation about its involvement.
Regarding the Bali resort, Tanoesoedibjo said: “We’re still thinking about what kind of entertainment we’re going to put there.”
The emergence and spread of COVID-19 means that “the business model of just [a] The resort town is not enough – we have to have some entertainment, ”he said, stressing that he aimed to reassess the resort’s plans so that it can accommodate an increase in post-pandemic tourism.