Digital Banks Maintain High Deposit Rates to Attract Funds

Competitive Landscape in Indonesia's Banking Sector

Digital banks in Indonesia are continuing to leverage high deposit interest rates as a key strategy to attract and retain funds. This approach is being employed amid intensifying competition not only among digital banks but also with conventional banking institutions. The competitive environment is pushing banks to offer more attractive rates to customers.

Amar Bank's Aggressive Deposit Strategy

Amar Bank is currently leading the digital banking sector with the highest deposit interest rates, offering between 5.75% to 9% for deposit tenors ranging from 1 to 36 months for amounts up to Rp 2 billion. This aggressive strategy has proven successful as evidenced by the bank's financial performance. By November, Amar Bank's deposits reached Rp 2.25 trillion, representing a significant 190.09% year-on-year growth. Deposits continue to dominate the bank's third-party funds composition at 86.79%, while lower-cost funds (CASA) stood at Rp 343.96 billion, growing 30.42% year-on-year.

Market Implications and Future Outlook

The reliance on high deposit rates by digital banks highlights the intense competition in Indonesia's banking sector, particularly in attracting and maintaining liquidity. While this strategy has been effective for Amar Bank in rapidly growing its deposit base, it also raises questions about sustainability given the associated funding costs. As competition continues to intensify, digital banks will need to balance between attracting new funds and maintaining profitability.