Ardian Wibisono

Banks are working to convince more Indonesians to do their transactions online. (AFP Photo: Bay Ismoyo)

More Banking Online in Indonesia Despite Security Worries

More and more banks have begun offering Internet banking in recent years as part of a drive to cut costs. Many customers find it more convenient to bank online, avoiding the lengthy queues at most branches. However, not everyone is convinced about the benefits.

Nyoman Bukian, an employee at a chemical company in Jakarta, is among those who prefer banking in the comfort of his own home.

“I am reluctant to go to a branch and waste time queueing when it is easier to do a transaction over the Internet,” he said.

Although banks have been increasing the number of branches, they prefer customers to shift to Internet banking because it costs much less to process transactions online.

“The cost of a transaction on the internet is only 8 percent to 9 percent of the cost if it’s done in a branch and it can be lowered even further,” said Wicahyo Ratomo, PT Bank Danamon’s head of alternative channels, adding that online transactions are even cheaper than using an ATM.

Widhayati Darmawan, senior vice president for electronic banking at PT Bank Mandiri, shares Wicahyo’s view. He explained that costs were lower because fewer staff are needed to provide service.

However, lenders must do more to convince skeptical customers to turn bank online.

“While more than 60 percent of total transactions are processed through electronic channels, only 10 percent are through Internet banking,” Widhayati said.

The easiest way to attract customers is to offer lower fees for online transactions. Bank Danamon even offers free transactions for tech savvy customers.

“Even with no charges passed on to customers, we still benefit from the efficiency,” said William Gomulia, Bank Danamon’s head of Internet and mobile banking.

Another way is to offer customers incentives for banking online. Mandiri offers cellular phone bonuses to customers who top up their mobiles over the Internet. The other approach, which has been taken by PT Bank Negara Indonesia, is to charge those customers who still opt to carry out basic transactions at a branch.

“We charge Rp 10,000 [$1] if a customer withdraws less then Rp 5 million through a branch,” said Rudhyanto Mooduto, BNI’s division head for network and service. “If a customer wants to make a small withdrawal or routine transaction like paying an electricity or phone bill, we advise them to do it through electronic channels like an ATM or the Internet.”

However, it is not easy to persuade customers to go online as many still doubt security on the Internet.

Jakarta resident Ary Suryo worries he could lose all his money if he starts banking online. “There is a possibility that you end up at a hoax Web page that could rob your user ID and password and then steal your money,” he said.

Wicahyo acknowledges that most people do not trust Internet transactions. To make its customers feel safer, Bank Danamon continuously updates its security system. “We’ve even hired hackers to test if the security can be breached and we buy up all online sites that have similar names to minimize phishing,” he said.

Phishing is the fraudulent process of attempting to acquire sensitive information such as user names, passwords and credit card details by masquerading as a trustworthy entity in an e-mail.

Many banks also provide security tokens or SMS pins to give additional protection to their customers. Without entering a security code produced by the token or sent through SMS, transactions cannot be completed even if the correct user name and password have been entered.

Widhayati is optimistic Internet banking will eventually take hold as more Indonesians go online. However, he emphasized that this would not lead to branches being closed down or staff being culled.

“Branches are still vital for those customers that need advice on investments or business expansion. You cannot consult a machine over such issues,” Widhayati said.

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