Indonesia’s largest Islamic bank goes live with new modern core banking system
Posted: 7 November 2012 | Source: Temenos
Temenos (SIX: TEMN), the market leading provider of banking software, today announced that PT Bank Syariah Mandiri (‘Bank Syariah Mandiri’), the largest Islamic bank in Indonesia, has successfully installed TEMENOS T24 (T24) core banking solution to support the growth of its business. With the deployment of T24 Model Bank for Islamic banking, Bank Syariah Mandiri has been able to implement flexible core banking software, designed to mitigate operating costs and reduce operational risk.
Indonesia is the biggest Muslim country with 202 million people. According to McKinsey, the economy of Indonesia has an enormous potential: Indonesia is now the 16th largest economy in the world and will become the 7th biggest by 2030*. In comparison to the Middle East, Islamic Banking in Indonesia is driven more by retail, micro, and a society based on banking choices.
Islamic Banking in Indonesia has been riding the expansion of the Indonesian economy, which has been growing at 5-6.5% annually over the last ten years, as well as the structural growth in the Islamic Banking industry which grows more than 50% annually, combining the largest Muslim population in the world with low Islamic Banking product penetration rates of 2.2%**. Indonesian President Susilo Bambang Yudhoyono has previously stated that “Indonesia has opportunity to be a focal point of Islamic finance within the region or even in the world.”
Implemented with Anabatic Technologies, Temenos’ Indonesian certified partner, T24 has been deployed across Bank Syariah Mandiri’s 705 branches – serving 3.5 million bank accounts. The bank now has an integrated, functionally rich core banking platform in place which supports the liability side of its Islamic banking business. This includes significant enhancements in providing Sharia-compliant profit sharing, with T24 able to facilitate much sought after support for three different variations of the profit sharing calculation. As a result the bank has enhanced agility and flexibility to better respond to customer requirements, and also to deliver new and improved services with faster time to market. Running on a Microsoft platform, both routine and complex banking processes – such as customer on-boarding – have been automated to increase efficiency and drive down operating costs. The second phase of the project will focus on the integration of the asset side of the business and on enhancing financing functionality.
Yuslam Fauzi, CEO, Bank Syariah Mandiri, commented: “The market share for Islamic banking in Indonesia is just four per cent, but growing twice as fast as conventional banking. The stability of Islamic banks during the financial crisis, and the ethical principles upon which these banks operate, have made Islamic banking increasingly popular in Indonesia. Bank Syariah Mandiri was created in 1999 by the Indonesian government as part of a restructuring and recapitalisation programme to offer a better way of banking in the country. The combination of strong business ideals and spiritual values has created a competitive advantage for us. As a fast growing company we were looking for a leading, state-of-the-art system to strengthen our position and to leverage market growth. Temenos offered T24 as a pre-configured, parameter-driven model bank with Sharia-compliant standard products and processes which we have adapted to the Indonesian market. Temenos’ open solution was easy to customise and offers us a stable and reliable platform to support future growth.”
Handojo Sutjipto, CEO, Anabatic Technologies, added: “It is hugely rewarding that Anabatic Technologies is able to act as Temenos’ services partner, as well as acting as the system integrator in this transformational project. Working with the leader in Islamic Banking in the country has further strengthened Anabatic’s confidence in future project delivery, supported by proven methodology based on Temenos Implementation Methodology.”
David Arnott, CEO, Temenos, said: “We are delighted to be supporting the largest Islamic bank in Indonesia with its IT-led growth strategy. Through the implementation of T24, Bank Syariah Mandiri has been able to replace more than 20 legacy applications to automate their banking processes. This lowers the total cost of ownership for the bank, and most importantly enables them to become even more service-oriented – strengthening the bank’s reputation for excellent customer service. T24 thereby not only supports Bank Syariah Mandiri’s work in the Islamic sector, but also allows the bank to devote more time and resources to its wider banking operations. This IT investment will aid Bank Syariah Mandiri in its aim to continue to lead the Indonesian market in the provision of best in class Sharia-compliant banking services.”
* Source: McKinsey Global Institute, 2012
** Source: Economist Intelligence Unit and Boston Consulting Group