Indonesia’s digital banks are rising quick. Customers are signing up, transactions are rising, and the numbers look spectacular on investor decks. 

Knowledge from Financial institution Indonesia (BI) exhibits that the overall worth of digital banking transactions elevated from IDR 40.85 billion (US$2.6 million) in 2021 to IDR 63.43 billion (US$4.1 million) in 2024. On paper, this indicators sturdy adoption and a quickly maturing ecosystem. However behind the expansion metrics, there’s a hidden actuality: most customers are usually not constructing wealth by means of digital banks. They’re merely passing cash by means of them.

Person development tells the same story. Analysis from Market Analysis Indonesia, cited by IDN Financials, reported that round 31 % of Indonesians actively used digital financial institution purposes in 2022. This determine is projected to achieve 39 per cent, or roughly 75 million customers, by 2026. A number of digital banks have already scaled aggressively. Allo Financial institution reported 12.7 million customers, Financial institution Jago reached 17.2 million, and Financial institution Neo Commerce claimed over 23 million customers.

At a look, these numbers look encouraging. Nonetheless, they elevate a extra elementary query: what function do digital banks really play in customers’ monetary lives?

Comfort first, dedication later

Digital banks are largely adopted as a result of they make on a regular basis transactions simpler. Populix’s survey in 2022 on shopper preferences in the direction of banking and e-wallet purposes discovered that customers worth digital banks for being hassle-free, straightforward to make use of, time-efficient, and properly built-in with e-commerce and e-wallet platforms.

This explains why digital banks make investments closely in fashionable interfaces (UI), clean onboarding (UX), and visually interesting design. These parts are efficient in attracting youthful customers, significantly Gen Z and millennials, who dominate the person base.

Additionally Learn: Digital banking in Indonesia: Rising significance and future traits

Nonetheless, good design alone doesn’t assure loyalty. Analysis cited by Mastercard, based mostly on PYMNTS knowledge, exhibits that Gen Z customers change monetary platforms considerably extra usually than older generations. This behaviour is usually described as a generational trait, nevertheless it additionally displays how simply customers can go away when there may be little purpose to remain.

In lots of instances, that purpose is transactional quite than relational.

When promotions drive behaviour

In apply, many customers select digital banks due to short-term incentives: free switch charges, cashback, reductions, or promotional returns. These presents are efficient in driving downloads and transactions, however their influence tends to fade as soon as the incentives are decreased.

The identical Populix survey highlights how digital banks are literally used. Round 84 per cent of respondents used digital banks to high up e-wallet balances, 68 per cent for e-commerce purchases, 56 per cent for transfers to members of the family, and 55 per cent for cellular credit score top-ups. Solely 48 per cent reported utilizing digital banks for funding functions. Notably, long-term financial savings or emergency funds weren’t talked about as major motivations.

This implies that for a lot of customers, digital banks perform extra as transaction instruments than as platforms for constructing monetary safety.

A distinct function from typical banks

This sample contrasts with typical banking fashions, the place long-term deposits and financial savings type the spine of asset development. Conventional banks encourage customers to maintain cash inside the system, creating stability and long-term worth.

Digital banks, however, usually give attention to sustaining exercise by means of campaigns and promotions. Whereas this aligns with present person behaviour, it additionally creates structural challenges. Advertising-driven development doesn’t essentially translate into stronger stability sheets or sustainable asset accumulation.

This concern is mirrored in exercise knowledge. In 2024, Jenius BTPN reported round 5.8 million customers, but solely about 25 per cent have been energetic. Financial institution Neo Commerce recorded month-to-month energetic person charges of roughly 10 to 12 per cent. These figures recommend that many accounts are opened for momentary wants quite than ongoing monetary administration.

Additionally Learn: AI in banking: Unlocking success with ChatGPT and embracing the long run

Past development metrics

Customers are essentially the most precious useful resource for any digital financial institution, however retaining them requires greater than steady promotions.

First, saving behaviour is usually handled as non-obligatory quite than central. Whereas most digital banks provide financial savings options, they’re not often designed as default habits. With out intentional design that encourages common saving, customers naturally prioritise spending.

Second, belief stays a important issue. Cybersecurity points and on-line fraud proceed to rise, with the Monetary Providers Authority (OJK) reporting losses of roughly IDR 120 trillion (US$7.7 billion) on account of monetary crimes. For digital banks, sturdy safety programs are usually not simply technical necessities, however key parts of the product’s core worth.

Lastly, customer support stays a weak level. Not like typical banks with bodily branches, digital banks rely fully on digital help channels. When entry to real-time help feels tough or unreliable, person confidence decreases shortly.

Rethinking the core worth

Digital banking in Indonesia has achieved scale, however scale alone doesn’t outline success. At current, many customers view digital banks as environment friendly instruments for spending quite than long-term monetary companions. This doesn’t imply digital banks are failing, nevertheless it does point out a missed alternative.

For product managers and enterprise homeowners, the problem is not person acquisition. It’s about redefining what digital banks stand for. With no stronger emphasis on saving behaviour, belief, and long-term engagement, digital banks will face heavy challenges in promotions sooner or later.

Sustainable development will rely upon whether or not digital banks can transfer past facilitating transactions and begin shaping more healthy monetary habits over time.

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Picture supply: Foto oleh rupixen di Unsplash

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