TEMPO.CO, Jakarta - Vice President Jusuf Kalla predicts that Indonesia’s bank industry is heading toward consolidation, either through mergers or acquisitions. He argues it is mainly caused by the tight competition in the development of financial system technologies.

According to Kalla, there were 250 banks in 1998 and has reduced to more than half throughout the years. Generally, there are currently 118 commercial banks in Indonesia.

“There would be natural mergers in the future. I predict an ideal number of 20-30 banks,” said Jusuf Kalla at the Perbanas Institute on Wednesday, February 27.

The vice president also argues that startup businesses in the field of financial technologies helped create a new business pattern for the industry. Jusuf Kalla maintains that without sufficient IT knowledge, banks would be left behind but will create an environment far from any monopoly.

Based on the data provided by the Financial Services Authority (OJK) per December 2018, there are currently 115 commercial bank entities in Indonesia with 1,597 rural banks (Bank Perkreditan Rakyat - BPR). The total assets of commercial banks in Indonesia per December 2018 amount to Rp8,068.35 trillion.

BISNIS