JAKARTA -- After conquering Indonesia's broadcast market, MNC Group founder and Executive Chairman Hary Tanoesoedibjo is seeking to tap his extensive media audience to fuel a new engine of growth: digital finance.
MNC is Indonesia's largest media conglomerate, with its popular television shows reaching every corner of Southeast Asia's most populous country. Tanoesoedibjo outlined to Nikkei in an interview his plan to ramp up new online banking operations by reaching the underbanked.
Founded in 1989 as a securities company, MNC Group has since expanded into a range of fields, including real estate. It acquired TV stations operated by the family of late Indonesian President Suharto after his 1998 ouster.
Many of Indonesia's leading conglomerates, like Sinar Mas, Salim and Lippo, were founded by entrepreneurs who have since passed the baton to their children and grandchildren. MNC belongs to a second, newer class of business groups launched in the 1980s in which original leaders, such as the 55-year-old Tanoesoedibjo, are still in charge.
Last month, the group launched Motion Banking, an online-only bank accessible via smartphone app. Tanoesoedibjo said he aims to sign up 10 million new customers in a year and 50 million in five years by offering a range of services, from virtual credit cards to insurance and securities trading.
"We want to also create synergy with our big ecosystem user base," he said, tapping MNC's cross-platform audience of more than 210 million.
The group's four TV stations draw more than 50% of the prime-time audience and are known for producing successful programs. The hit weeknight soap opera "Ikatan Cinta," or "a bond of love," consistently scores viewer ratings of around 50% or higher.
Tanoesoedibjo discussed plans to place Motion Banking ads across the country during broadcasts of "Ikatan Cinta" and other programming. He envisions QR codes in ads at the bottom of the TV screen so that viewers can open accounts on the spot. The application will use facial recognition technology tied to the country's national identity database to speed the process.
With a population of 270 million -- the largest in Southeast Asia and fourth-largest in the world -- Indonesia's online banking sector has drawn interest from across the region. Only half of Indonesian adults have a bank account, while nearly 70% own a mobile phone, giving online banking significant room for growth.
Rivals, however, are closing in fast. Indonesian "super app" provider Gojek announced an investment in Bank Jago under a capital partnership toward the end of 2020. It also announced its merger with e-commerce giant Tokopedia in May and plans to offer a range of services, including banking, on its app. Ride-hailing company Grab and e-retailer Sea, both based in Singapore, are believed to also be planning forays into the field.
And on Friday, BCA Digital, the digital bank subsidiary of Indonesia's largest private lender, Bank Central Asia, launched its mobile banking platform -- blu -- on Google Play Store, targeting hundreds of thousands of new customers this year from among the youth segment.
Taking the increasingly crowded industry into account, Gary Hanniffy, director for banks in the Asia Pacific for credit rating agency Fitch Ratings, said Indonesian digital lenders could enjoy healthy margins from lower fixed costs in the absence of a physical branch network -- as well as high yields paid by borrowers in the underserved segment "with little to no credit history" or collateral to offer as security against borrowings.
"However, we believe the ultimate success of digital lenders in achieving and sustaining profitability will largely depend on their ability to achieve sufficient scale and effectively manage credit risk in a segment that has been mostly avoided by the traditional banks due to the high risk of default," Hanniffy told Nikkei Asia.
"The viability of the digital lenders' largely untested business models remains uncertain for now," he added.
Tanoesoedibjo, however, is bullish on MNC's prospects as ride-hailing companies like Gojek are "present in big cities -- they don't cover the unbanked," he said.
"The good thing about our group, we reach everyone in the country," Tanoesoedibjo said. He is thus highly confident that MNC can lead digital banking in Indonesia in terms of account numbers, since it can penetrate unbanked populations yet to be tapped in areas such as Papua, Maluku, West Papua, East Nusa Tenggara and West Nusa Tenggara.
For all of 2020, core group member MNC Investama reported net profit of 1.5 trillion rupiah ($103 million) on total net revenue of roughly 14.8 trillion rupiah -- down 27% and 7%, respectively. But its stock price surged this June amid growing hopes for the online banking sector.
Currently, 65% of MNC's revenue comes from media and 25% from financial services, according to Tanoesoedibjo. The goal is to reach "40:40 in the next five years," he said of the desired percentage ratio. In addition to TV, he aims to leverage the group's social media channels to reach a broader customer base.
MNC is also developing integrated resorts in Bali and Bogor, a city near Jakarta, together with the Trump Organization. The projects, which involve golf and hotel facilities, are slated to become the Trump Organization's first integrated resort in Asia.
Tanoesoedibjo said Donald Trump Jr., former U.S. President Donald Trump's son, was his "counterpart" on the project and that he "just talked to him" the week before Nikkei's interview. The two sides signed a deal in 2015 on the joint development. But marketing literature distributed in March did not mention the Trump Organization, sparking speculation on whether it was still involved.
Regarding the Bali resort, Tanoesoedibjo said: "We are still thinking what kind of entertainment we are going to put there."
The emergence and spread of COVID-19 means that "the business model of just [a] resort is not enough -- we need to have entertainment," he said, stressing that he aims to reevaluate plans for the resort so it can accommodate a post-pandemic surge in tourism.