Not enough room on the digital ark for Indonesia's sinking banks

Indonesia’s banking sector is under pressure. Regulators are pushing for consolidation. For the smaller ones—from over 100 digitally disrupted banks—teaming up with tech companies like Gojek is one chance to survive, even thrive. But there's too many banks and too few tech players

At the end of last year, Gojek revealed its acquisition of a 22% stake in Bank Jago, a previously relatively unknown bank

Gojek’s investment resulted in a stock rally for the small bank, but owning a stake in a fully licenced bank serves Gojek, too

Indonesia is littered with small banks looking to exit, and similar constellations are already forming. Like Sea Group and BKE

Not all will mimic the same deep relationship Bank Jago has with Gojek and opt for staying neutral instead

It started in September 2019. A relatively unknown, small bank on the Indonesian Stock Exchange (IDX) suddenly came alive. For years, Bank Artos had been trading at around a mere IDR 25 (US$0.0018) per share. By the first week of October 2019, shares were up to IDR 400 (US$0.028), that’s already a 1,500% increase. Fast forward to now, the bank’s shares are worth IDR 4,350 (US$0.31).

Bank Artos’ fate completely turned around in the span of a year, from an obscure, low-tier bank to one of the hottest stocks on the IDX.

The trigger to the frenzy was two new investors taking control.

AUTHOR

Nadine Freischlad

Nadine is based in Indonesia. She covers Southeast Asia's super apps, the changing nature of work and employment, and other structural shifts happening as a result of digital disruption.

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