Financial institutions are bracing for the ‘invisible banking’ era.
Indonesian financial institutions are recalibrating growth strategies around underserved small and medium-sized enterprises (SMEs), digitally connected mass-market consumers, and a fast-growing emerging affluent segment.
Speaking at the Asian Banking & Finance and Insurance Asia Summit in Indonesia, executives from KB Bank, BNI, and PT Asuransi Central Asia (ACA) said lenders and insurers are increasingly organising distribution, lending, and product development around ecosystems and embedded finance rather than standalone banking products.
The discussion comes as Indonesia’s financial inclusion gap remains pronounced. Micro, small, and medium-sized enterprises (MSMEs) contribute roughly 60% of gross domestic product (GDP) but receive only about 18% of total lending, according to figures cited during the panel.
Executives said the imbalance highlights a structural opportunity for banks willing to move beyond conventional underwriting and distribution models.
“We approach SMEs through the supply chain ecosystem,” said Sigit Prihatmoko, head of the corporate innovation centre at BNI. “Instead of traditional banking, we try to connect SMEs to corporate ecosystems where we already have relationships.”
BNI is also targeting payroll ecosystems, government-linked digital projects, and Indonesian diaspora communities as it expands beyond its traditional wholesale banking base, he added.
Robby Mondong, retail director of KB Bank, said banks are no longer competing solely with peers, particularly amongst younger consumers.
“The loyalty is no longer to the brand or the bank,” Mondong said. “Customers are looking for the best pricing, the best accessibility, and they can compare services instantly on their phones.”
That pressure is accelerating investment in embedded finance and digital distribution. Executives said financial products are increasingly being integrated into e-commerce, travel, and lifestyle platforms, reducing the visibility of traditional banking channels.
Prihatmoko described the trend as a move towards “invisible banking,” where financial services are embedded into customers’ daily activities rather than accessed through branches or standalone banking apps.
Indrawati Darmawan, CFO of ACA, said insurers continue to face slower digital adoption than banks, particularly in claims processing and policy servicing. Even when digital claims systems are available, many customers still prefer in-person assistance or agent support.
The divergence is shaping how insurers allocate growth capital across segments.
For general insurance, Darmawan said the focus remains on SMEs and the mass market, whilst life insurers are increasingly targeting the emerging affluent segment, driven by rising investment activity and wealth accumulation amongst younger Indonesians.
She described the emerging affluent as a generation building wealth through property, equities, and digital assets rather than entrepreneurship alone. “The emerging affluent are the billionaires in waiting.”
Executives also identified cybersecurity, artificial intelligence (AI) adoption, and regulatory adaptation as key battlegrounds over the next several years.
Prihatmoko said banks are moving beyond isolated AI use cases towards enterprise-wide implementation strategies aimed at improving customer targeting and relationship management.
“We believe the future is human interaction supported by AI intelligence in the background,” he said.
Darmawan warned that AI could become both an operational advantage and a risk factor for financial institutions, particularly as regulators increase scrutiny of digital financial services.
“The competition will come from pricing, speed, and digital capability,” she said. “AI is a double-edged sword.”