Indonesian Banks See Returns on IT Investments, Boosting Fee Income and Asset Quality
Indonesian banks are beginning to significantly benefit from their strategic investments in information technology, with several major institutions reporting robust growth in fee income. This tech-driven transformation is also contributing to improved operational efficiency and asset quality across the sector.
Bank Central Asia (BCA) stands out as a prime example, reaping the rewards of its IT initiatives. According to UOB Kay Hian (UOBKH) analyst Posmarito Pakpahan, BCA now boasts the lowest cost-to-income ratio in the Indonesian banking industry, alongside the highest current account and savings account (CASA) ratio. This indicates strong operational efficiency and a highly stable funding base, largely attributable to its tech advancements.
Similarly, Bank Mandiri has seen a notable enhancement in its funding structure, achieving the second-highest CASA ratio among the nation’s “Big Four” banks. UOBKH also highlights that Bank Mandiri’s digital fee income has grown by double digits, showcasing the direct financial returns from its digital efforts.
Beyond income and efficiency, both Bank Central Asia and Bank Mandiri are recognized for having the best asset quality among their peers. This is attributed to their effective management of write-offs and a controlled formation of new nonperforming loans (NPLs).
While Bank Central Asia and Bank Mandiri are already seeing substantial returns, Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia (BNI) are actively in the process of strengthening their deposit franchises, suggesting similar IT-driven initiatives are underway to enhance their funding bases.
It’s worth noting that, for the broader banking industry, IT operational expenses remained elevated in the first quarter of 2025, indicating continued investment in technological infrastructure to support these growth and efficiency objectives.
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