Bank Rakyat Indonesia 
            

State-owned Bank Rakyat Indonesia (BRI) is the largest national bank in Indonesia in terms of assets, and the largest microfinance institution in the world. Founded in 1895, BRI focuses on micro banking, providing financial services for small businesses and individuals all over Indonesia. It has 9,000 physical bank branches and a network of over 500,000 hyperlocal “branchless” agents serving over 100,000,000 customers.

BRI’s main focus is offering microfinance loans to some of the smallest businesses in Indonesia. They could be farmers who cannot afford to buy seed for the next season’s crops, a fishermen who needs to replace torn nets to catch more fish, or newly established micro-segment entrepreneurs who just started their business and want to expand their capital with no collateral assets.

Without microfinancing, low-income businesses and individuals such as these would have no access to financial services – or would be forced to go to unethical lenders. Technology is revolutionizing these financial services, helping banks to reach some of the most remote unbanked people, and competition is increasing worldwide.

BRI began its digital transformation journey in 2016--and had established some baseline digital capabilities--but when 2020 and the pandemic came along it knew it had to act faster.

Randy Desmond, Senior Manager, Middleware Platform Development at BRI, said: “Our business did not stop during the pandemic. Although the profits were down, we saw that as a catalyst for accelerating our digital transformation. Because of that, we are ready and optimistic to be bouncing back to fly even higher this year”

With new entrants to the microfinance market popping up all the time, speed to market was of the utmost importance. The problem was, BRI was working with a monolithic architecture comprised of several middleware platforms, acquired over the years in silos, for purposes from front-end systems to core banking.

It also had hundreds of systems which consists of 30+ mobile and web channels, 20+ middleware platforms, 30 back-end systems, and more than 100 third-party services which needed to be integrated and simplified. BRI was bogged down by technology that had limited capabilities and performance and could not support the new digital banking initiative.

The Three S’s

BRI’s growth targets are lofty: it aims to become the most valuable banking group in South East Asia and Champion of Financial Inclusion by 2025. To achieve that vision, the bank’s strategy was to go smaller, go shorter, go swifter—the “Three S Strategy”—extending “hyperlocal” ultra-microfinancing, with shorter terms and faster approvals to even smaller, low-income customers.

But shorter terms—monthly or even daily loans—offer smaller profit margins, so BRI had to squeeze costs out of its transactions. The answer was not in building more branches—that would only increase costs. Only by offering and handling loans digitally could BRI increase its reach, offer faster loan closings and still make it work financially.

Three years ago, a loan took an average of two weeks from customer application to closing. It now takes two days and the bank has a prototype to reduce that to an almost-instantaneous five minutes.

BRI needed to streamline its existing mishmash of technology and move to a single integration platform that supports omni-channel integration and also microservices architecture. To do this, Desmond said it decided to partner with a large technology company, and approached Software AG, as well as some of its competitors.

webMethods wins on performance, speed

Software AG’s webMethods won hands-down, building a proof of concept (PoC) that meet 100% of their requirements in only two weeks. Competitors needed more than three weeks to build one—and were not able to meet all the requirements.

Also in the PoC for performance, webMethods was able to handle a much higher transaction volume than BRI’s expectations – and double that of competitors (1.500 transactions per second versus less than 750). webMethods proved to BRI that it would give the bank a faster time-to-market and far better performance than competitors.

BRI purchased webMethods Integration late in 2018 and went live in 2019. The bank’s next steps include moving to microservices and DevOps, and also adding new services for customers.

Since its inception in 2019, the new middleware system aims to take massive annual transactions growth from the existing 45 million in 2020 to 3 billion in 2021, an increase of 66 times, with over 500+ APIs running in the systems

Speed to market for ultra-micro loans

Indonesia is a large country. Much of it is rural and remote, with no infrastructure for a branch network. Here, branchless agents act as hyperlocal bank representatives, offering a service to their community and helping to provide a financial cushion to the local economy.

The agents, each of whom has an “office” in a local store, use a technology called BRILink for daily banking & payment services to the loan applications. Many remote locations lack any Internet capabilities, so the bank has a satellite service to provide connectivity.

Thanks to webMethods, BRI can provide omni-channel capabilities and rich features for its mobile banking customers and its remote hyperlocal agent network, giving them faster services and better coverage throughout Indonesia.

As Desmond said: “Business as usual is dead, we have to be digital.”

With Software AG and webMethods, its customer base is growing, transactions are growing, and BRI is on its way to achieve its impressive growth goals.