Building public trust

By Jonminofri Nazir

JAKARTA (JP): Visit the Bank of London and you will notice the building is supported by big pillars, probably the biggest compared to the other buildings in the neighborhood.

Its like the bank is trying to show the people that the building will never collapse.

The Bank Indonesia building on Jl. Thamrin, Central Jakarta, also appears to be a sturdy building. Although not very tall, the building is surrounded by high concrete walls, which represent a high level of security.

Compare it with the Sarinah shopping center, which is also located on the same main road. The building is tall, but with cracks visible on its ground floor. It does not seem to be as secure as Bank Indonesia.

Alright, the strength of a bank's building and its security are two separate issues, but that is the way folks at the banking industry assures its customers of its security.

If the building looks strong, whatever is kept inside it, such as cash and important documents, will be secure. This is what they mean by trust.

Public trust is key for a bank. Imagine if you go to a bank to deposit money you have worked hard for, and the teller just gives you a piece of crumpled paper as the proof of your deposit. You will not likely want to remain a customer of that bank.

Did you know that people trust banks with their money more than any other party, including their spouses? Although most people do not understand the system used by their banks, they have blind faith in them.

However, when customers lose trust in a bank, they will start withdrawing their money at one fell swoop. And we have a rush.

If the situation persists, the bank will not have enough cash for transactions. And if the bank does not receive liquidity help immediately, it will go bankrupt -- as what happened to Bank Summa several years ago.

When the monetary crisis hit the nation in 1997 and culminated in 1998, people's trust in banks nearly ended. This was seen by the long queues of people withdrawing their money from banks all over the country.

If such a situation were allowed to continue, the country's economy would collapse. That was why the government issued a policy guaranteeing all deposits in banks. The policy has helped the banking industry from collapsing.

Building trust

Let's see how banks can gain public trust.

According to the Pakto 88 policy on the banking sector issued in October 1988, anyone wishing to establish a bank should have an initial capital of Rp 10 billion.

However, it generally takes time for the public to be convinced that a bank is secure.

In the mean time, the bank's holding company usually pays the salaries of the bank's employees.

However, bank employees can always transfer their money to banks they trust more.

We have seen that only a few banks established after 1988 have survived. Many of them had to close even before they could gain the public's trust.

People's trust in a bank cannot be built instantly. Instead, it is a slow and costly process.

BCA which currently has some 8,000,000 customers is a good example. This means some 8,000,000 people trust BCA with their money. This is a huge number.

Why does the public trust BCA? The answer is quite simple: BCA has succeeded in building a good secure system and people are confident their money will be safe in the bank.

However, there are other banks with secure systems which are as good if not better than BCA's.

The difference is that BCA built public trust gradually.

Like other banks, BCA started its service through its branches in many locations throughout the country.

The bank was able to assure customers that their money was safe in the bank.

After achieving this, BCA began to popularize its ATM system.

It took some three years for the public to trust its ATMs. After the ATMs gained the public's faith, its usage began to skyrocket.

The story of the security and convenience of using ATMs spread and the bank subsequently gained more customers.

The bank then added more functions to their ATMs.

Following this, BCA began developing its Internet banking system.

This system has not been proven secure yet. If customers feel the new system is secure, their trust in the bank will be strengthened.

The facilities offered by BCA's Internet banking system are still limited and not as many as offered by its ATM system. However, this is intentional. If the bank immediately allowed customers to make large transactions using the new system, and it proved insecure, the bank will lose its hard earned customers.

BCA's Internet transaction is limited to Rp 3 million so that the risk of loosing big money is low, even though that is unlikely as it is supported by a sophisticated security system

If its Internet banking system has gained public's trust, the public will be familiarized with making transactions using their cellular phones. The bank will likely restrict the amount of money that can be used for transactions using the system at its early stage.

Imagine if BCA launched its Internet and cellular phone banking systems all at once, the bank may risk losing the trust of the public.