BI Rate Hike: Will Digital Banks Spark a Deposit Rate War?
Jakarta — The Financial Services Authority (OJK) considers it normal for digital banks to raise deposit interest rates in response to the increase in Bank Indonesia’s (BI) benchmark rate.
OJK’s Chief Executive of Banking Supervision, Dian Ediana Rae, stated that digital banks rely heavily on third-party funds, particularly expensive deposits. Furthermore, these banks must compete with major lenders to gather public funds.
“For deposits, it makes sense, the deposit interest rate. Because, in some respects, digital banks especially rely heavily on funds, third-party funds, and those funds are quite expensive,” Dian said when met at the DPR RI Building on Wednesday.
Dian assessed that the willingness of digital banks to raise deposit rates signals their confidence in the stability of the financial system. “I think they have calculated that. If risks were starting to increase, they would not dare to do it. So, if I see it, it means they have confidence in the system, that it is still okay,” he remarked.
He acknowledged the potential for increasingly tight banking competition due to the benchmark rate hike. However, Dian noted that the liquidity market remains conducive so far. “Maybe, regarding liquidity, perhaps. But from what I see, the interbank money market is still normal. Progress is still normal, nothing is too spiked. It’s just normal supply and demand, there is no very high demand yet. I don’t see that in the latest data,” Dian explained.
As is known, BI raised the BI Rate to 5.50% during its weekly Board of Governors Meeting last week.
Responding to this, Commissioner of PT Bank Jago Tbk., Anika Faisal, said that with the BI Rate hike, the cost of funding will rise gradually. This condition is usually followed by an increase in bank deposit rates, but she noted that this must be studied further. “We have to review it, we will also observe. It might not be immediate. But surely, gradually, it will happen. We have now entered an era of rising interest rates,” Anika stated when met at the Dhanapala Building on Tuesday.
Meanwhile, PT Bank Raya Indonesia Tbk. is anticipating the central bank’s rate hike by strengthening its funding structure. Bank Raya’s Business Director, Kicky Andrie Davetra, explained that as of the first quarter of 2026, the CASA structure at this BRI business entity remains on a fairly good trend. “This will certainly be capital for us in addressing future interest rate developments,” Kicky said during a Public Expose Live at the Indonesia Stock Exchange on Tuesday.