Indonesia
Prof. Masud Said discussed the challenges facing Regional Development Banks (BPDs) during a podcast with Indonesian Banking Development Institute (LPPI). Hosted by Syarif Ipung, Prof. Masud, who currently serves as an independent commissioner at Bank Jatim, shared his experiences in regional autonomy development, covering both governance and economic aspects.
Prof. Mas’ud noted that there are at least three challenges facing BPD development in Indonesia.
The first challenge is digital competition. BPDs face pressure from various fronts, ranging from digital banks to large commercial banks. Consequently, digital transformation has become an absolute necessity for survival.
“If we stick to traditional methods, regional banks will be left behind by Gen Z. The current generation wants fast and secure services,” explained Prof. Masud.
Read also: Talk Show: “Regional Development Banks: Resilient, Competitive, and Contributive”
The second challenge is capitalization. Regional Development Banks (BPDs) often have limited scale compared to national banks or Himbara banks, which restricts their competitiveness.
“The scale of BPD differs significantly from Himbara banks or private banks, and the scale of BPD aligns with the regional budget (APBD) and the portion allocated as capital,” explained Prof. Masud
Citing a statement from the OJK, Prof. Masud elaborated, “If a bank’s capital is below 3 trillion, the bank cannot grow. It must be above 11 trillion,”
The third challenge is dependence on the local consumption/spending sector. Many Regional Development Banks (BPDs) remain heavily reliant on consumer loans (such as civil servant loans) and have not yet optimally tapped into the productive sector or SMEs.
“Regarding opportunities in the credit sector, we must be able to develop a credit sector that is not only large but also of high quality. Even if there are productive loans, they still constitute a small sector.”
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These challenges must be able to withstand (be resilient) economic shocks and cyberattacks through strengthened governance and digital transformation. Regional Development Banks must also be competitive, capable of competing with other banks through efficiency and service innovation. The ultimate goal is for Regional Development Banks to contribute to regional development.
Addressing these challenges faced by Regional Development Banks, the solutions have been outlined in Prof. Masud Said’s book titled “Resilient, Competitive, and Contributive Regional Development Banks.” This newly published book, released in early 2026, is published by Kompas Publishing and is available through Gramedia. (PPS/AL)
