Indonesian Banking Sector Undergoes Significant Branch Consolidation

Digital Transformation Drives Branch Reduction

The Indonesian banking landscape is experiencing a significant transformation as digitalization continues to reshape customer behavior and banking operations. According to data from the Financial Services Authority (OJK), the number of bank branches in Indonesia has decreased substantially over the past year. As of June 2025, the total number of bank branches stood at 23,538, representing a decline of 632 units from the previous year when there were 24,170 branches.

State-owned and Private Banks Lead Consolidation Efforts

The branch consolidation trend is evident across different categories of banks. State-owned banks have reduced their branch network by 286 units, bringing the total to 12,078 branches in June 2025, down from 12,364 in June 2024. Private banks have also been actively consolidating, with their branch numbers decreasing by 299 units to 7,442 during the same period.

Drivers of Branch Consolidation

The primary driver behind this consolidation is the rapid adoption of digital banking services among consumers. As more customers shift their banking activities to online and mobile platforms, the need for physical branches has diminished. This trend is forcing banks to reevaluate their branch networks and optimize their physical presence to remain cost-effective while maintaining service quality.

Strategic Implications for Indonesian Banking

The ongoing branch consolidation reflects a broader strategic shift in the Indonesian banking sector. Banks are increasingly focusing on digital infrastructure and services while rationalizing their physical footprint. This transformation is likely to continue as technology evolves and customer preferences continue to shift towards digital banking solutions.