Keeping the Welfare Level of Productive-Poor Customers of BTPN Syariah in Check with the PPI >

Bank Tabungan Pensiunan Nasional Syariah

An interview with Ahmad Fajri Prabowo, Risk Policy Analyst at BTPN Syariah

BTPN Syariah Indonesia originally started off as a business unit within BTPN Bank in March 2008 to specifically serve “productive poor” communities, focusing on women from low-income families in rural villages who are willing to try and supplement their household income by starting businesses. The business unit was successfully spun off into a Syariah (Sharia-compliant) commercial bank in 2014 after the acquisition of PT Bank Sahabat Purba Danarta (Bank Sahabat).

As the 12th Syariah bank in Indonesia, BTPN Syariah strives to continue focusing on financial inclusion initiatives with women’s empowerment and Islamic banking principles at the core of its business activity. To date, BTPN Syariah services have reached 21 provinces in Indonesia through the work of over 12,000 employees.

To date, BTPN Syariah has served more than 2 million productive poor customers through a financing product called Paket Masa Depan (PMD), or Package for a Better Future. PMD is a product that finances small and micro enterprises by rural communities. The product is attached to a capacity building program called DAYA, through which customers gain skills and knowledge in the areas of health and wellness, entrepreneurial capacity building, and community empowerment.

1. When did your organization start using the PPI, and why? What was the need you were hoping to address?

BTPN Syariah’s vision is “to become the best Islamic bank for financial inclusion, changing the lives of millions of Indonesians.” The management of BTPN Syariah decided to use the PPI, an internationally-recognized poverty measurement tool, to measure changes in customer welfare to ensure that we were working toward that mission. Our management realized the importance of having a reliable tool to measure the alignment of the Bank’s goals with its achievement and progress, which is why we’ve been using the PPI from an early stage (even while we were still a business unit within BTPN Bank). We’ve continued using the PPI since we spun off into BTPN Syariah.

2. Describe your organization's purpose for using the PPI and what objectives it allows you to achieve. What actions has your organization taken as a result of what you've learned from the data?

By implementing the PPI, BTPN Syariah is able to assess how likely a customer is to be classified in the productive poor segment. PPI data can also provide information that allows BTPN Syariah to explore new product initiatives and services.

In order to get a picture of our customers’ wealth from the PPI data, our MIS team works on grouping, benchmarking, and analysing the data in various ways, yielding reports that are readable and useful for the organization as we make business decisions. Two of the reports that are created are the Poverty Outreach Report and the Poverty Movement Report.

The Poverty Outreach Report helps BTPN Syariah understand how well the Bank’s services are penetrating the intended segment, the productive poor communities. The POR tells us whether or not we are targeting the correct customers regionally. Having this report allows us to continuously evaluate our alignment between business achievement and in reaching our goal of serving millions of productive poor people in Indonesia. Three important indicators that are included in the Poverty Outreach Report are:

  • Concentration, which shows the ratio of productive poor customers to total customers in BTPN Syariah’s financing portfolio and is calculated using PPI poverty likelihoods;
  • Scale, an indicator that describes how BTPN Syariah’s services are distributed throughout Indonesia, which is generated using points of sale and numbers of clients; and
  • Penetration, an indicator of BTPN Syariah’s reach in underprivileged communities, which is represented by the ratio of poor customers who are being served by BTPN Syariah to total poor customers in the province.

The Poverty Movement Report allows BTPN Syariah to observe the welfare changes of customers using the PMD financing product. Financing is offered on an ongoing basis to eligible customers. The Poverty Movement Report illustrates the change in customer welfare between loan cycles by estimating the change in the concentration of underprivileged customers from cycle to cycle. This information will eventually ensure us about our progress in aligning our business aspiration and our achievements.

In addition, the PPI survey questions often give BTPN Syariah a glimpse into customers’ financial experiences, and we occasionally follow up with them to hear more.

3. Discuss some of the difficulties you faced (or still face!) when using the PPI. How have you (or are you) solving them?

Because collecting PPI data is a continuous process, consistency and discipline in the way the data is collected and analysed is absolutely necessary in order to get useful results over time. Ensuring that our field staff – those who implement the PPI surveys – carry out their work in a consistent, disciplined way has been a challenge we have faced. That’s why we work to build consistency and discipline through BTPN Syariah’s culture, and we put systems in place that will make the survey implementers’ work easier, like better data governance and more automated monitoring. We built a PPI data input system to reduce errors during data entry and to enable remote monitoring, and we created clear PPI supervisory guidelines for field officers’ activity.

4. What advice would you give to other PPI users or prospective users?

The PPI is a proven tool for wealth measurement. It gives us a clear understanding of where we stand on our path to our goals. Implementing the PPI needs a great commitment: it goes beyond a survey containing several questions. It’s a tool to measure an institution’s success. We are proud of our organization’s commitment to the implementation of PPI. We urge other users to commit to using the PPI with consistency and discipline, and to integrate it into their organizations’ systems, as we have.