Brief: After bank takeover, Indonesia’s Salim Group plans push in digital payments

Inside an Indomaret convenience store. Salim Group operates more than 10,000 of them across Indonesia.

The news:

• Salim Group, one of Indonesia’s largest conglomerates, has acquired a majority stake of at least 51 percent  in a local bank, Ina Perdana, for a reported US$42 million.
• Operating its own bank will enable Salim Group to link its other services through digital payments and digital banking. An application it’s eyeing is peer-to-peer money transfers and loans using its convenience store chain Indomaret as a bank branch. Salim operates more than 10,000 such stores across Indonesia.
• Salim says it will begin testing new services internally for its 500,000 employees during the second half of 2017, making use of the fingerprint-recognition technology it has been developing in a joint venture with Tokyo-based startup Liquid.

Why it matters:

• Salim Group has not been in the banking business since the 1998 Asian financial crisis. The return means Salim Group joins other Indonesian conglomerates like Lippo Group in the rush to build digital payments infrastructure and digital banking services.
• Peer-to-peer lending, algorithm-based investment advisors, credit scoring systems, e-wallets, and other fintech applications have been mushrooming in Indonesia in the past year. Both startups and established players aim to offer breakthrough solutions.
• Financial technology has been recognized by Indonesian government agencies as a solution to improve financial inclusion.

Source: Nikkei Asian Review.