Winners rationale

The Indonesian government in 2019 announced sweeping tax reforms, including a move into a territorial tax system and income tax relaxation for foreign residents. The aim was to boost investment and aid the profound growth of the banking market in Indonesia. As a bank targeting offshore Indonesian wealth since the tax amnesty scheme was launched two years earlier, Bank Mandiri in 2019 fast tracked business efficiency growth with relentless core system improvements.

Bank Mandiri’s wealth management division achieved over 30% growth in revenue and still managed to shed more than 20% of its operational expenditure compared to 2018. In terms of net new assets, the bank — riding on an accelerating domestic bond market — enjoyed double-digit growth.

The efficiency improvement is reflected in RM productivity. With the mix of locally groomed and more experienced senior RMs, the bank encouraged the transfer of knowledge within the team and provided constant learning opportunities for RMs of varied seniority. By optimising unproductive assets and regular quality contact and portfolio review, the bank achieved a 6.1% increase in RM productivity, in terms of revenue generated per headcount.

The impressive results are rooted in the belief of continued improvement in client experience achieved by phases of digitalisation from front to back. Bank Mandiri’s wealth management division took digitalisation a step further in 2019 by signing a partnership with Avaloq. The collaboration allowed the Indonesian lender to consolidate separate systems for processing different investment transactions and to view customer portfolios currently used by Bank Mandiri onto a single platform.

Unlike its domestic peers that tend to develop their wealth management services in-house, Bank Mandiri was proactively adopting global standards by working with international peers. It created a strategic partnership with Lombard Odier in 2018, with the bank entering the preparatory phase for launching the first discretionary portfolio management scheme that could be customised according to clients’ risk appetite in Indonesia in 2019.

After the tax amnesty and the global tax regulatory scheme for the automatic exchange of information (AEOI) in 2017, the bank endeavoured to compete with its global peers by offering a diverse product shelf that catered to both the onshore and offshore wealth of Indonesian HNW clients. Regulatory approval is pending for the bank to extend its discretionary portfolio management solutions to the Singapore branch.

Bank Mandiri is Asian Private Banker’s Best Private Bank – Indonesia Domestic for 2019.