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SPI: Riding Wave of Electronic Money to Grow

Toto Prayogo, Reza Ashari Nasution


In Indonesia, banking literacy was still very low and the majority of transactions is still based on cash [1], [2]. Electronic money gave a glimmer of hope to make more Indonesian people part of financial system because it is easy to use and inexpensive to produce. More and more Indonesian people were switching from cash to electronic money to transact. Mr. Bayu, the third Chief Executive Officer (CEO) of PT Sistem Pembayaran Indonesia (SPI), saw a big opportunity in electronic money to grow SPI's revenue. Mr. Bayu recalled what Mr. Thomas's proposal, VP Corporate Strategy, said to audience during Management Review Meeting earlier this month. Mr. Thomas confidently proposed that electronic money services be included in the SPI portfolio. According to him, SPI must transition from Automatic Teller Machine (ATM) transactions to electronic money transactions as the main source of revenue. However, some people in the forum doubted whether the proposal could be a good prospect, considering that electronic money transaction service fees are considered too loose. Mr. Bayu was challenged to determine the direction of SPI in picking up opportunities with the presence of electronic money. In 2017, SPI together with three other switching institutions formed the National Payment Gateway (NPG), the interconnection between the four switching institutions to facilitate affordable inter-bank connections, including inter-electronic money operators later. Even though electronic money operators used point-to-point connection[3] to reach each member of ecosystem, they would need switching services that are able to provide scalability and manageability. However, NPG has resulted in the commoditization of switching services because the member switching institutions must have the same Standard Operating Procedure (SOP), Pricing Scheme, Service Level Agreement (SLA). Besides this commoditization, regulations that separated the ownership of front-end systems and back-end made SPI have limited added value. Coupled with government policies that gave more privileges to state-owned companies, the SPI position became increasingly weak. Mr. Bayu thought of the success of SPI in the last two years of his leadership tenure, which mainly relied on ATM transactions. The company's revenue grew but sloped along with the stagnant growth of transactions through ATM machines. He was determined to make SPI have a big role in capturing the value created by electronic money. But he thought what role SPI could play in the electronic money industry so that it could increase revenue in a healthy manner and complied with valid regulations.
“SPI's long-term goal is to become a 1 Billion USD company while its short-term goal is to become the market leader in the payment system industry and alternative electronic payment,” expressed Mr. Bayu.


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