Neobank: from 70,000 customers to 25 million in one year

Gavin Allen: What prompted your company to embrace digitalization and launch the Neobank app two years ago?

Justin Chen: Actually, we could see a very big potential, like back in 2020, when more than half of the population in Indonesia was unbanked or under-banked. First, we believe this is a big opportunity, and second, we want to help the Indonesian people access more financial services. Indonesia is growing very fast. We hope that ordinary people, especially in remote areas, can catch up to the tide of financial services.

Gavin Allen: What challenges did your bank face?

Justin Chen: We needed to start quickly, because of the market—when you see something, when you see an opportunity, there are a lot of other people also looking at it. At the very beginning, we considered it like an online business. You need to do it fast. You need to conquer the market.

But no, because banking operates according to different rules. You cannot conquer the market, and the regulator doesn't allow you to do that. We focus on serving our customers. That's the most important thing you have to do.

Gavin Allen: But was it quite difficult going from an established bank that had been around at that stage for 30 years, suddenly into a digital environment?

Justin Chen: That's two parts. First, you need to build up all the new systems. For this part, it's not that easy, but it's not that difficult because building up systems is what we do. But you also have to change the way the bank works. You have to change how people interpret the business.

In the past, when someone walked into the branch, your branch manager was already evaluating these people: How much money can I make from him? For the Internet business, because you don't see the people directly, you have to do something that’s not easy to verify in real life. You need to check all the data. You need to do the statistics so you know if what you're doing is right or wrong.

Gavin Allen: You’ve talked about the importance of flexibility. What do you mean by that?

Justin Chen: BNC is a small bank. We are not a super-giant like BCA or Mandiri. When they want to change something, they need to consider a lot.

But at BNC, when we started this business, we only had like 70,000 customers, so there aren’t many legacy burdens on our side. We need to do things very fast. It’s like an auto race where you have to change the wheels while the car is running. That's what I mean by flexibility. We can’t wait there in the garage until we build a super good car; we have to join the race now, no matter what.

We have a flexible architecture and organization to make sure I can change all the parts while I'm racing.

Gavin Allen: What has helped you succeed? You talked about having 70,000 customers originally with the old bank, and you got something like 30 million in the first year with the digital bank. What enabled you to get to that stage?

Justin Chen: Surprisingly, what we are doing is way easier than we expected in the early days. Indonesia has very good infrastructure. For example, they have digital bills. You can do online KYC [Know Your Customer]. So that means your customers don't have to come to a branch. You can just prepare a very nice user experience so that all they need to do is open their account from their app. Not many Indonesians had experienced that, but they found it was really good for them. In the past, they had to go to the branch. And sometimes they are shy. When you don't have that much money in your pocket, you might be afraid to go to the branch and be questioned by the teller. But now they can do it without interacting with people.

Gavin Allen: And also at their own convenience, at the moments they want to do it.

Justin Chen: Yes, that's the best thing for them. You know, they need to take a selfie because we do facial recognition [to verify their identities]. In the very early days, I checked photos on the back end. I saw that their faces were very happy. Not like when they're sitting at the front desk with a teller, where they're quite nervous.

Gavin Allen: So how has Huawei helped with this digital transformation?

Justin Chen: We employ Huawei Cloud to help grow our business more easily. When the business was getting more complicated and the volume was growing, we found that infrastructure maintenance was also a big problem. Whenever you want to change something, you find your hands are tied because of this, because of that. We said to Huawei, “I will just leave all the trouble to you, and focus on how to make money."

Gavin Allen: To summarize, then, in terms of where you are now in terms of numbers, or how you measure success currently?

Justin Chen: In terms of user base, I would say we have a kind of success, because we've got maybe 25 million customers at this moment. In terms of deposits, we should have more than US$1 billion. Also, we have a large volume of transactions. We are not profitable yet. So that's the last part: profit.