Saving BPR Business, OJK Asks Business Actors To Collaborate With Fintech

Illustration (Photo: Doc. Antara)

JAKARTA - The Financial Services Authority (OJK) encourages Rural Banks (BPR) and Sharia Rural Banks (BPRS) to increase collaboration with fellow business actors in the financial industry to explore business potential that is currently growing.

The Chief Executive of OJK Banking Supervision Heru Kristiyana said that one of the opportunities for developing BPR and BPRS businesses is through synergies with financial technology or fintech companies.

"The rapid advancement of technology certainly presents its own challenges for BPRs and BPRS," he said in a webinar titled Launching Roadmap for BPR and BPRS Industrial Development 2021-2025 on Tuesday, November 30.

According to Heru, the shift in people's behavior towards digital has led to changes in people's needs for banking products and services that are also digital.

"This is also accelerated by the conditions of the COVID-19 pandemic, which has made restrictions on community activities a challenge for BPRs and BPRS," he said.

Heru added that digitalization in the financial sector as well as the proliferation of shadow banking resulted in increasingly fierce competition, especially in the MSME segment which is the main market share of BPR and BPRS.

"For this reason, collaboration with fintech lending provides a complementary relationship and makes fintech lending not a big competitor for BPRs and BPRS," he added.

Meanwhile, other benefits that can be achieved by Rural Banks are being able to maintain the company's internal conditions to be more economical in conducting business.

"Collaborating with healthy partners will maintain sustainability and increase the efficiency of BPR and BPRS," he said.

For information, as much as 99.1 percent of Rural Bank lending is dominated by a ceiling below Rp500 million. Then, 49.8 percent of the credit goes to the productive sector.

Just so you know, the BPR business segmentation is not only challenged in terms of technology but is also considered to intersect with one of the government's strategic programs.

"The upstream BPR competition is subsidized lending programs from the government such as the People's Business Credit (KUR)," concluded Heru.