In an era where digitalization permeates every aspect of life, banking sector in Indonesia is no exception. Over the past five years, the number of ATMs and bank offices closing their doors has been significant, with 12,227 ATMs and 6,819 bank offices shutting down. This trend reflects the broader shift towards digital banking and efficiency.
According to data from the Indonesian Banking Surveillance released by the Financial Services Authority (OJK) on Monday (3/6/2024), the number of ATMs, CDMs, and CRMs in Indonesia at the end of 2023 was 91,412 units, down 2,604 units from the previous year’s 94,016 units.
The last five years have seen a steady decline, with 12,227 fewer units compared to the end of 2019, when there were 103,639 units. Similarly, banks have been reducing their physical presence.
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The Indonesian Banking Statistics released by the OJK indicate that as of February 2024, the number of bank offices in Indonesia stood at 24,268 units, reflecting a decrease of 794 offices in one year. Over the past five years, the number of bank offices has declined by 6,819 units.
Branch offices specifically have also seen reductions, with the number dropping to 3,423 units. This is a reduction of 33 branch offices in the past year and 186 units over the past five years.
Economist Poltak Hotradero noted that maintaining ATMs is a significant expense for banks, contributing to higher operational costs relative to income (BOPO ratio). A higher BOPO ratio indicates inefficiency in bank operations.
“The decline in ATMs (in Indonesia) is a global trend [due to the high costs of maintenance, insurance, and rental]. For example, China sees a decrease of 150,000 to 200,000 ATMs annually. Digital payments will be increasingly preferred,” he explained, as quoted by Bisnis.
Poltak emphasized that as digital payments become more prevalent, the use of physical cash will diminish, a shift supported by central banks globally.
“Cash handling is expensive,” he added.
He also highlighted the increasing use of QRIS among the public, which further reduces the relevance of ATMs.
Bank Indonesia data shows a decrease in the nominal value of transactions using ATM or debit cards by 12.49% year-on-year (yoy) in April 2024, totaling Rp619.19 trillion. In contrast, digital banking transactions such as QRIS have surged.
Digital banking transactions reached Rp5,340.92 trillion, growing by 19.08% yoy. Electronic money transactions also increased by 33.99% yoy, reaching Rp90.44 trillion.
QRIS transactions have grown nearly threefold, or 194.06% yoy, with 48.90 million users and 31.86 million merchants. Additionally, BI-FAST transactions in April 2024 grew by 56.70% yoy to Rp612.90 trillion.
This shift towards digital banking is not just a local phenomenon but a part of a global trend towards more efficient, cost-effective banking practices.
As Indonesia continues to embrace digital solutions, the banking landscape is expected to evolve, with more emphasis on digital transactions and less on physical infrastructure. This evolution is likely to continue shaping the future of banking in Indonesia, making financial services more accessible and convenient for the populace.
