Like a tightrope walker dealing with an unexpected gust of wind, there are many factors today that can jolt the financial services industry in Indonesia. On one hand, there is optimism that increased domestic economic activity from consumption and investments will bolster the growth of the industry. On the other, the operating environment for financial institutions has become more complex as new technology trends such as the move to cloud, hybrid work, and increasing concerns around security and consumer privacy come into play. 

A McKinsey's study of 1,000 CEOs of large companies in the world outlines three major challenges facing the industry: Disruptive technologies are transforming how companies are thinking of their business operations and cybersecurity roadmaps. CEOs around the world are worried about economic uncertainty and they are prioritizing product and service innovations that can improve their bottom lines and that have sustainability in mind. Geopolitical issues are also being watched by CEOs as the interconnectedness of supply chains also means that companies must be stronger and more resilient to global shocks. 

What do financial institutions need to do to seize new digital opportunities to make it to the end of the tightrope and capture their next phase of growth? We identify five priorities below.

Recognize that applications are now the new business model

Over the past few years, digital financial transactions have increased significantly in Indonesia, driven by a growing acceptance and preference for online shopping from consumers, the expansion and convenience of digital payment systems, and the acceleration of digital banking. Data from Bank Indonesia shows that the value of digital banking transactions grew by 22 percent from Rp52,545.8 trillion in 2022 and is projected to reach Rp67,000 trillion in 2023.

 As applications become the new business model, financial institutions, and firms need to reimagine how they build, deploy, and secure them. This starts with embedding visibility across the entire digital experience and mapping this to real-time business context to provide IT teams with insights on how the technology stack impacts each application, and more importantly, the business. Identifying the exact point in the digital journey where the issue is and resolving it in real time allows them to identify and mitigate issues ahead of time to provide consumers with the best possible experience. 

Rethink how business and work can be done from anywhere 

Hybrid work has become a competitive battleground in the escalating war for talent. With 8 in 10 (84%) employees in Indonesia saying they want a hybrid work model, organizations need to ensure that everyone has a great collaboration experience, equal opportunities, and a shared sense of purpose for the company and each other, regardless of their physical location. 

Apart from enabling employees to connect to their corporate applications seamlessly and securely, technology can be an enabler in helping hybrid teams be fully engaged, feel included, and work their best and in bridging communication between financial institutions and end-customers. An example is leveraging inclusive features like real-time translation or AI-powered audio intelligence on collaboration platforms like Webex to optimize meetings for all voices and transcend any differences in locations, languages, and backgrounds. 

This inclusivity needs to extend to people's policies and guidelines. Financial institutions need to ensure that all hybrid employees are rewarded and acknowledged equally in the long run by updating their onboarding process and reassessing the inclusiveness of employee benefits, supported by empathic leadership and trust in the company culture. 

Secure what’s connected across the company 

There is a growing need to secure everything, everywhere, as security is no longer confined to office walls but wherever employees sit. Historically, security has been an arms race in the industry. New solutions have been formed whenever new attacks emerge. 

Today, the average organization uses 75 different security tools from different vendors. This complexity is slowing them with 93 percent of respondents saying they need a centralized place for IT management and insights into their infrastructure, network, applications, cybersecurity, and or digital experience. 

Financial institutions need to move away from a patchwork of complex tools and take a platform approach to security, one that leverages AI to enable them to centrally manage security policies and detect and respond to threats. This is where Cisco can play a larger role with the Cisco Security Platform by harnessing a comprehensive approach to zero trust and continuous innovations in AI/ML algorithms to simplify cybersecurity and deliver unified experiences to customers and partners. 

Leading the charge on sustainability 

As the Indonesian government works towards its net-zero emissions target for 2060, this provides an opportunity for financial institutions to take the lead on sustainability by incentivizing the integration of sustainability criteria into financial services decision-making. This can be done in several ways including financing sustainable programs, tracking the carbon footprint in transactions, and others. 

Digital technologies are critical to these sustainability solutions. The financial industry’s power grid requires digital infrastructure that is powerful enough to connect all these sources. New chip architectures like Cisco Silicon One that promise expanded bandwidth and ultra-low latency will pave the way for simpler, more powerful, and less energy-hungry networks. Digital platforms that offer comprehensive visibility over telemetry across sustainability metrics like the carbon footprint of each device help to track emissions trends over time to conclude progress towards sustainability goals and translate that into action plans. 

They also need to think about embedding circularity in their business model and champion a digital, nature-positive value chain within the ecosystem, such as working with partners who engineer every product for adaptation and reuse. This will have to be a collective effort from the ecosystem where every organization will have to think beyond themselves and work and communicate these strategies to their customers and partners. 

Unlocking the next generation of digital financial services is an exciting and transformative journey for the financial industry in Indonesia. By focusing on apps as a new business model, rethinking how business is done in the era of hybrid working, securing their business, and making strides in sustainability, the financial industry will be at the forefront of the dynamic digital landscape and deliver greater value to their customers. These priorities are at the heart of how Cisco innovates and develop its technology. 

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Marina Kacaribu is the managing director at Cisco Indonesia.