Case Study: Self Employed Mass Market Banking at Bank Danamon, Indonesia
Fullerton Financial Holdings acquired a majority stake in Bank Danamon in June 2003

By listening to prospective customers, Bank Danamon was able to create a new business serving the self-employed mass market (SEMM) in Indonesia in just 14 months, a business which by the end of 2007 had grown from scratch to 16% of the bank's total loan portfolio.

Shortly after investing in Bank Danamon, Fullerton Financial Holdings deployed a team of bankers with international experience to evaluate the opportunities in Indonesia. A strategic planning exercise including exhaustive market research identified the SEMM segment that was underserved by the banking industry. In fact, less than a third had any access to banking services.

Tangible, hands-on support to define a new business model for SEMM

Over 1,000 interviews conducted in eight major cities revealed that these self employed entrepreneurs wanted fast, simple and convenient banking services. To many banks these requirements might have seemed unreasonable, given the low tenor of the loans and the lack of credit histories. However, Fullerton Financial Holdings bankers worked to innovate a new model to best serve this segment, in a sustainable way. Mr Ali Yong, Director and Head of Mass Market Business said, "With Fullerton Financial Holdings leading the team and providing tangible hands-on support every step of the way, we were able to build a customer centric business based on the desires of the self employed entrepreneurs."

Innovative use of technology

A simple set of products with well-defined criteria made it easy for the bank to market, sell and approve the products. Handheld, thumb-print secured technology, developed to simplify banking transactions, gave the bank straight-through processing. Mr Yong said, "Close customer relationships and strict compliance with credit rules have also resulted in low levels of non-performing loans."

Rapid growth and a profitable business

Stringent performance indicators for every aspect of the business – from customer acquisition to loan applications and collections – empower staff to achieve, while letting managers keep a close eye on the bottom line. By the end of 2007, loans serviced by almost 7,500 staff working from 726 branches contributed over 20% of the overall profit of Bank Danamon.