Banking is not usually a sector that sets the pulse racing. Except, on occasion, in Indonesia. Southeast Asia’s largest advertising economy has been buoyed by a flurry of intensely fought advertising pitches for the big banking groups over the past few months. Bank Rakyat Indonesia (BRI), Bank Danoman, Bank Permata and the country’s largest financial services firm, Bank Mandiri, have either called pitches or made agency appointments since the end of June.
These reviews, characterised by pitch lists of up to eight agencies, have proved colourful affairs, even by Indonesian standards. Observers snipe that the clients have decided on the winner before a single presentation has been made, and are simply going through the motions of a statutory review.
It would be comical, if banking in the archipelago weren’t such a serious business. Indonesia will, few doubt, become one of world’s biggest banking markets. If PricewaterhouseCoopers predictions are to be believed, Indonesia’s banking sector will be the size of that of France or Italy by 2050.
There are 130 commercial banks in Indonesia, although the top 10 account for 60 per cent of total assets and credits. The competition between these 10, most of which are government-owned, is intense, and that is why they are prepared to spend billions of rupiah on marketing. And why every agency in Jakarta covets a bank client.
In such a competitive market, the Holy Grail is differentiation. Yet the opposite has happened, observes Joseph Tan, country head of Lowe Indonesia. Banks have become more similar in their hurry to mimic the products and services offered by their rivals. Usually the only way to distinguish an Indonesian bank is the colour of its branding, says Tan. Bank Mandiri uses red in its advertising, for example, while Bank Permata uses green.
There are exceptions. Andoko Darta, co-chairman of Euro RSCG AdWork, points to BRI, which has positioned itself as a leader in micro-financing thanks to a vast network of 4000 branches. Bank Central Asia, meanwhile, presents itself as a leader in transaction banks in urban areas.
The preferred way for an Indonesian bank to stand out, however, appears to be through generous consumer promotions. If it is not a car giveaway, then it is a prize of several million rupiah dangled in front of prospective customers.
Partha Kabi, MD of ZenithOptimedia, says that banks are spending a disproportionate amount on promotions. “In some cases banks are spending as much as 90 per cent of their budgets on promotions and 10 per cent on product advertising, even though research shows that promotions are not very effective.”
These are not the long-term answer, argues Lulut Asmara, president of JWT Adforce. “Products are no longer differentiators since all the banks have similar products. They need to know what sort of a bank they want to be.”
These views are echoed by Robert McBrain, MD of Bates141 Indonesia. “The secret will be marrying long-term brand development with short-term tactical promotions,” he says.
Ad budgets for government-linked banks in Indonesia still rest with brand managers with scant marketing experience, so change may be slow in coming.
Yet Tan believes the sector has to evolve eventually. “Sooner or later the banks will reach a point of diminishing returns and they will need to innovate. It will just need one local bank to start the trend and the rest will follow.”
