JAKARTA - The Financial Services Authority (OJK) said that the potential for termination of employment (PHK) due to the large number of closures of bank branch offices is not a big problem because the banking industry had previously anticipated it.
"The branch closure process which has an impact on employee reduction has been anticipated through a retraining and reallocation program to other business units within the bank," said OJK Banking Supervision Chief Executive Dian Ediana Rae quoting Antara.
Furthermore, Dian said that until now the potential for termination of mass layoffs has not caused major problems because banks are said to have complied with labor regulations, including in terms of providing appropriate compensation for affected employees.
Dian explained that the number of commercial bank branch offices that were trending to decline was basically a step taken based on the business decisions of each bank.
The downward trend in the number of branches will continue along with the increasing adoption of information technology in the financial sector which is increasingly having an impact on changes in people's behavior, expectations, and public needs for financial services from banks.
"The adoption of digital technology in banking services allows customers to access services anytime and anywhere, thereby minimizing the use of bank office services in terms of being unproductive and having a low volume of transactions," said Dian.
With easier access to services through online applications and platforms, the need to come directly to the branch office is becoming increasingly minimal, especially for small or unproductive transactions.
"Digitalization allows banking services to be accessed anytime and anywhere, so operational efficiency is the main focus," said Dian.
Based on data from Indonesian Banking Statistics (SPI) OJK, the number of commercial bank offices is recorded in a downward trend from time to time.
In March 2024, the total number of commercial bank offices was 24,243 units. The number of public bank offices is shrinking, where the latest data as of March 2025 was recorded at 23,734 units.
State-owned banks or Himbara have become the bank that has reduced the most physical offices in the past year. A total of 275 offices were closed, from 12,391 units as of March 2024 to 12,116 as of March 2025.
Furthermore, the private bank has closed 187 physical offices, from 7,789 units as of March 2024 to 7,602 as of March 2025. The Regional Development Bank (BPD) closed 47 physical offices, from 4,044 units as of March 2024 to 3,997 units as of March 2025. Meanwhile, the branch offices of foreign banks remain 19 units.
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