JAKARTA: State-owned Bank Negara Indonesia (BNI) is increasing its efforts to generate more fee-based income from the cash management business this year despite weak economic growth, according to bank executives.
Sri Indira, deputy general manager for transaction banking services at BNI, said the bank was convinced that it could achieve its fee-based income target of Rp 1 trillion (US$73.3 million) this year from cash management services only.
“We are optimistic that we will achieve our target, because we’ve already reached at least 75 percent of it,” Sri said.
In the first half, BNI booked Rp 4.28 trillion in non-interest income, a slight increase from Rp 4.2 trillion in the same period last year, according to a corporate presentation published on its website.
Rp 3.29 trillion worth of recurring fees — revenue generated from continuous or repeated fees — contributed to the non-interest income as of June, a 5.11 percent increase from Rp 3.13 trillion in the same period last year.
In an effort to boost its fee-based revenue, BNI has signed a memorandum of understanding with state-owned financing firm Permodalan Nasional Madani (PNM) that will enable the bank to expand cash management services for PNM and its subsidiaries operating in various sectors.
Through the partnership, Sri said PNM and its subsidiaries would be able to manage their cash flows and collection activities toward the company’s customers through an electronic system called “virtual account”, which could increase operation efficiency.
As PNM operates mainly at the micro level of society, Sri said BNI would also help the firm educate its customers on the benefits of shifting collection payments to electronic means, such as SMS banking and other digital channels.
“PNM currently has 200,000 customers across the country and we hope to manage at least 50 percent of that number,” Sri said, adding that the exact potential of fee-based income from the partnership had yet to be calculated.
PNM president director Parman Nataatmadja said the company and its subsidiaries currently had 700 branches, including 477 micro-loan outlets across the country, while expecting that the total network could reach at least 1,000 offices next year.
According to Parman, the agreement with BNI could be a solid foundation for the company to expand its payroll system for 6,400 employees by utilizing BNI’s cash management services in the future, as it currently still managed the system with private banks.
BNI business banking director Sutanto said the agreement expanded BNI’s partnership with PNM as both parties had signed previously a loan facility agreement up to Rp 750 billion channeled as micro, small and medium-sized loans for the company’s customers.
Aside from partnering with PNM, Sri said BNI was actively seeking new corporate customers by promoting its cash management services to various companies that had large potential fund bases, such as in the oil and gas and e-commerce sectors.
Sri said BNI already had 15 partners from the e-commerce sector that utilized the bank’s cash management services for collection and settlement purposes, with total transaction volume now reaching at least Rp 1 trillion.
“The circulation of funds is big in e-commerce, because an average of 200,000 items are purchased each month,” Sri said.
