Eugene K. Galbraith

ASEAN BUSINESS LEADERS: You have a long standing career in Indonesia, including Advisor to the Indonesian Ministry of Finance in 1988, and after that in the private banking sector, before appointment in BCA as Commissioner and since 2011 as Director. Can you please give an introduction about yourself and what made you interested to work in Finance in Asia?

EUGENE K. GALBRAITH: There are a lot of opportunities in Southeast Asia, particularly in Indonesia. At the time I came in, there were many banking reforms happening in Indonesia towards developing the finance sector. It was a very exciting time: Indonesia was very open towards reforms, people were very supportive, it was just a great opportunity.

Since then, the Indonesian banking and finance have tremendously progressed. Nowadays, we see a vibrant finance sector in which both public and the private banks are playing a vital role. I feel proud to be a part of these developments, and currently in my role as Director at BCA. I am responsible for general supervision of the Compliance Director, Chief Risk Officer, Credit Risk Management and I oversee the Finance and Planning Division.

ASEAN BUSINESS LEADERS: BCA is the third largest bank by assets in Indonesia. What is the current focus of BCA and how does it foresee growth this coming year?

EUGENE K. GALBRAITH: The banking outlook is improved, and we are optimistic. This year’s growth will be much better compared to the past few years. There are better expectations for credit risk and there is a reduction of loan losses. In the current circumstances, the bigger banks are in slightly a better position than smaller banks as the conditions of the economy now are solid – a little bit of a weakness in some areas so the bigger banks have a better chance to grow. We have invested in infrastructure and resources to strengthen our core transaction banking and lending business. I expect our profitability to grow double digit which is slightly above the sector average.

ASEAN BUSINESS LEADERS: Mobile banking and Fin-tech are important financial service as part of the transformation to a “cashless society”. How does BCA promote innovation in this segment?

EUGENE K. GALBRAITH: Technology is very important in each industry, and especially in banking. Technology has to be implemented to be competitive, but it has to be carefully managed because it can also pose a risk. BCA is the market leader in digital delivery channels.

Now, 98% of our transactions occur digitally, and only 2% happen at the branches.
Due to the bad traffic conditions, technology is a timesaver and it is much more convenient. The base of our strategy is to provide convenient, secure and reliable financial services. If we can be convenient secure and reliable we will be able to grow our business.

We were the first bank to get into a number of technologies including the digital technologies. We were the first bank in developing ATM’s back in early 90s, and we were the first to offer internet banking in early 2000. We’ve become by far the most aggressive bank in the mobile banking channel, and the market share of mobile banking is overwhelming.

Despite the opportunities in mobile banking, there are many challenges as well. Control of data management for example. BCA has not moved to the cloud yet because you can’t directly control the risk.

I think the penetration has only just begun; Indonesian people are very enthusiastic adaptors of technology. I am confident it will grow at a higher pace than many other places in the world. It also enables us to leapfrog some of the constraints of not having physical connectivity like some developed countries do.

You have to understand that Java is about the size of England, and Borneo is larger than Greenland. While there are many people in Java the rest of the islands are not as densely populated, nevertheless our banking services aspire to reach all those areas. So, the digital revolution – using WIFI and the ability to get over the lack of physical connectivity is a great opportunity for our bank, or any bank based here in Indonesia.

ASEAN BUSINESS LEADERS: It has been said that availability of qualified human capital is a challenge in Indonesia. How does BCA deal with these challenges to develop and retain its employees?

EUGENE K. GALBRAITH: BCA has a low employee turnover rate, which is under 5%. Part of that is because BCA has an open management approach and the bank is big enough to offer people opportunities to grow. I am aware that people say that “Finding qualified people in Indonesia is a challenge,” but I honestly believe is not the case in BCA. There’s a tremendous pool of talented people available.

ASEAN BUSINESS LEADERS: Islamic Banking has grown rapidly in value and geographical reach has become an important and integral part of the financial systems in many countries. How does BCA tap into this promising market?

EUGENE K. GALBRAITH: We think that Islamic finance has a lot of good prospects. Syariah banking is a product which is not yet well understood by the market place, beyond the basic element that Islamic finance is for people who wish to be observant of Islam and its rules and structures. Then, Syariah banking is a better alternative.

But how it works people don’t really understand. They are much more familiar right now with conventional banking but we feel that over time people will develop an understanding of Islamic banking and it will provide the market with an appealing alternative financial product, so our approach to Syariah banking is to grow it steadily.

If you look at many other Syariah banks in Indonesia, they have quite a volatile performance so they do well for a few years and then encounter problems. Our bank hasn’t had any problems so far, but it has grown steadily. Our BCA Syariah bank is more focused on towns than the countryside. Usually people in the urban and suburban areas are more informed about different financial products and services.

ASEAN BUSINESS LEADERS: The outlook for 2018 is moderately positive with 5.3% GDP growth. What do you expect for this coming year and do you see improvements for the banking sector?

EUGENE K. GALBRAITH: The current economic situation is very good. We are confident that as the government infrastructure investment comes on stream, which we expect to be felt at the second half of this year and through the first half of next year. This will have very positive effects on commerce and consequently on the need for banking services. The infrastructure investments are really transformative and will benefit the whole country.

ASEAN BUSINESS LEADERS: Last year, Indonesia moved up from the 41st to the 36th rank based on the 137 countries indexed by the World Economic Forum (WEF). What were the measures taken to which you contribute this improvement, and what are the challenges that the financial industry is addressing to continue advancing its competitiveness?

EUGENE K. GALBRAITH: The Indonesian society tends to takes its cues from the top so the president has been very clear in his guidance and his personal example that he would like to see business thrive. He has been an open advocate towards the establishment of efficient business operations and the legal system is working better.

These developments have encouraged confidence especially in the domestic market, where Indonesian investors are increasing their exposure to their own society. We need a deeper capital market, at the moment much financing relies on banks and the bond market is pretty thin. We need to develop our capital markets as well as the banking market. It is only a matter of time as the economy grows they will seek alternatives: we will find mutual funds developing, life insurance companies growing, and this all will contribute to develop the capital market.

ASEAN BUSINESS LEADERS: What is your message of confidence for investor who is interested to invest in Indonesia?

EUGENE K. GALBRAITH: The message is that the president and the cabinets have indicated and followed through on their desire to provide an open and steadily improving environment for foreign investment and Indonesia is a country blessed with both, extraordinary wealth of natural resources and diversity and a very large domestic market. There are great opportunities in the export side an processing side and sales side domestic. 2019 will be a better year than 2018, 2018 was a better year than 2017: we are up trending.