215-1800-003

October, 2015
MANDIRI UNIVERSITY Program
DIAN TRIASURYA
NETTA J. SJAFEI

PT BANK MANDIRI (PERSERO), Tbk,:

IMPLEMENTING LOAN ORIGINATION SYSTEM TO
IMPROVE EFFICIENCY AND PRODUCTIVITY

We need to do Total Football... If we want to do offense or defense,

we would and should do it altogether
Hery Rukmana Credit Operation Group Head, Bank Mandiri

It was December 2011, Herry Rukmana, Credit Operation Group Head

was reviewing several reports indicating increasing inefficiencies (in
the form of....) and declining productivity (in loan transactions or
rupiah) within the Consumer Loan Group. He recalled that in the
previous management meetings, the emphasis was more and more
about efficiency and productivity hence Service and Operational
Excellence was becoming a buzz word.
From his experience and his last visit to (Bank of.... in ....) as well as
various workshops that he attended, Herry learned about the Loan
Origination System which was a Business Process Reengineering
utilizing centralized Document Management System with paperless
business concept to accelerate consumer credit process and
administration. Information and Communication Technology was
developed to support the Loan Origination System. Credit process from
application in each branch nationwide until credit disbursement pass
through electronic workflow technology was controlled by the so called
Loan Factory, a division under Credit Operation Group. Implementing
centralization in consumer loan segments was expected to be

Dian Triasurya and Netta J. Sjafei prepared this case from field sources assisted by Sonny Setyawan and BINUS Case
Center. BBS cases are developed solely as the basis for class discussions. Cases are not intended to serve as
endorsements, sources of primary data, or illustrations of effective or ineffective management
Copyright 2015 BINUS Case Center. To order copies and request permission to reproduce materials, call 62-21-720-2222
or go to http://international.binus.ac.id/rnd. No part of this publication may be reproduced, stored in a retrieval system,
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otherwise without the permission of BINUS Case Center.

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PT BANK MANDIRI (PERSERO), Tbk: CENTRALIZED OPERATION

IMPLEMENTING LOAN
ORIGINATION SYSTEM TO IMPROVE EFFICIENCY AND PRODUCTIVITY

beneficial to support the three pillars of Bank Mandiri: Business Unit,

Risk Management and Operation.
Implementation of Loan Origination System was expected to transform
business processes in Consumer Loan administration as it would shift
from manual process conducted by loan officer in each branch to
centralized electronic process run by Factory Loan Division using Loan
Origination System. Implementation of the system certainly would
change organization structures, job descriptions as well as load
balancing for employees involved in theses consumer credit processes.
Outstanding leadership indeed would play an important role in
ensuring that implementation of the centralization process would run
as smoothly as possible to achieve so called Operational Excellence.
Considering the pros and cons of the new initiative, Herry was
contemplating when the new Loan Origination System should be
implemented. He needed to consult with Business Process Engineering
expert on this to prepare for all possible risks that would be involved,
the impact the changes would bring to the organization, the people
and the business in turn.
Company History
Established on October 2, 1998 as a part of banking restructuring
program conducted by the Government of Indonesia, Bank Mandiri is
the largest bank in Indonesia in terms of asset, loan and deposit (insert
numbers). In the mid of 1999, four state owned banks: Bank Bumi
Daya (BBD), Bank Dagang Negara (BDN), Bank Ekspor Impor Indonesia
(Bank Exim) and Bank Pembangunan Indonesia (Bapindo) were merged
into Bank Mandiri. After going through consolidation process and full
integration in every line of business, Bank Mandiri had been developed
into a solid bank and had been implementing new integrated core
banking system which replaced core banking systems of the four
legacy banks.
Year 2005 was a milestone for Bank Mandiri, in which Bank Mandiri was
decided to be a regional champion bank as it implemented
transformation program with four main strategies: Cultural
Implementation, NPL Control, Bisnis Growth Acceleration, and Alliance
Program Development.

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PT BANK MANDIRI (PERSERO), Tbk: CENTRALIZED OPERATION

IMPLEMENTING LOAN
ORIGINATION SYSTEM TO IMPROVE EFFICIENCY AND PRODUCTIVITY

In 2010, to enhance its performance, Bank Mandiri continued its

transformation by revitalizing its Vision: To be the Most Admired and
Progressive Financial Institution in Indonesia. Bank Mandiri aims to be
the biggest market capitalization in Indonesia and becomes the Top 5
Bank in ASEAN. Furthermore, in 2020 Bank Mandiri targets to be the
Top 3 Bank in ASEAN in term of market capitalization and to be the
prime bank in the regional.
To point toward this vision, Bank Mandiri focused into three business
areas; Wholesale Transaction, Retail Deposit and Payment, and Retail
Financing. [continue with brief explanation of each]
Along with business transformation, Bank Mandiri also conducted
cultural transformation by reformulating corporate values to guide
employees and comes up with five corporate values called TIPCE

Trust
Integrity
Professionalism
Customer Focus
Excellence

All of these continous transformation had brought Bank Mandiri to achieve

several awards as the Best Bank in Indonesia from three prime and prestigious
financial publications: Finance Asia, Asiamoney and the Banker. Moreover, Bank
mandiri received Best Bank in Service Excellence Award from Marketing Research
Indonesia (MRI) and SWA Magazine for seven consecutive years and Most Trusted
Company Award for eight consecutive years from from International Institute for
Corporate Governance (IICG).

Credit Operation Group

As an integral part of the Technology and Operations Directorate, as shown in
Exhibits 1, Credit Operation Group consisted of several departments namely: COI
Dept, CCL Dept, CPM Dept, BGO Dept, LF 1 Dept, LF 2 Dept
Led by Herry Rukmana as Group Head, Credit Operation Group was responsible to
ensure that credit process and administration are able to run smoothly in an efficient
and effective way.
Exhibit 1:
Organization Structure: Credit Operation Group moved to back

In operation management, especially in financial services industry such as

Banking, the keyword was Operational Excellence. In order to have a common
beliefs or ideals shared by employees of the Group, Herry Rukmana formulated the
value of Credit Operation Group as CAT: Cepat (speedy), Akurat (accurate)
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PT BANK MANDIRI (PERSERO), Tbk: CENTRALIZED OPERATION

IMPLEMENTING LOAN
ORIGINATION SYSTEM TO IMPROVE EFFICIENCY AND PRODUCTIVITY

and Tepat (precise). As a leader, he believes that in credit administration,

operational excellence is when bank could provide and deliver the product (credit)
on time, the product could be designed as closely as demanded by customer or
accurate and the product could be repeatedly delivered to customers in high degree
of consistency or precision.
One of credit segments in which operational exellence is under responsibility of Credit
Operation Group is Consumer Loan. Characteristics of consumers in this segment
certainly required speed, accuracy and precision. As the nature of the consumer loan
products demanded high speed of delivery with accuracy and precision, Credit
Operation Group managed to ensure that these needs would be served by the bank
to its customers. Moreover, by providing speed, accuracy and precision, the bank
could take advantage of cost saving as it was able to operate in efficient and
effective way. As a result, to compete in this mass product segment, Bank Mandiri
needed to strive to provide operational excellence, since it was not only beneficial for
customers but it also provided cost saving to the bank itself.

Centralized vs. Decentralized Operations?

To achieve Operational Excellence, one of the main and key factor need to be
considered by an organization was Centralization. There were several products or
programs in Bank Mandiri that had been centralized. In 2011, Bank Mandiri - Credit
operation group started a project to centralize administration process of consumer
loan product. And as it ran well, later in 2012 all the credit administration team
previously decentralized were merged under Credit Operation Group.

Pro Centralized Operations

As products of consumer loan were mass products, it would be considerably
advantageous if the products were stardardized and centralized. One of the
advantages was efficiency and effectiveness due to economies of scale. Second
advantage related to Operational Excellence is certainty of Service Level Agreement.
Previously one branch required four hours to process credit application, while other
branch five hours. Furthermore, decentralization and unstardardized operation makes
process somewhat uncontrollable. As it was centralized and standardized, it will give
more certainty in delivery of loan products and consistency in administration process.
Another benefit of centralization process is security of loan collateral as all collateral
is placed and located in one Store Room in Juanda for bank and customer safety.
In addition, the main advantage of centralized operation is that it would be beneficial
to balance customer needs and bank interest of risk management. Previously when
marketing and operation under one roof, there are potential that credit process would
be more lenient as sales people of business unit would attempt to satisfy customer
need while risk management could be sacrificed. By having centralized operation, it
would balance the need to satisfy customer with risk management as credit
requirement and administration would be stardardized. Sales people, operation and
risk management then should work together in stardardized process to make sure
that all requirements are met before credit application would be approved. As Bapak
Herry Rukmana stated: We need to do Total Football. If we want to offense or
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PT BANK MANDIRI (PERSERO), Tbk: CENTRALIZED OPERATION

IMPLEMENTING LOAN
ORIGINATION SYSTEM TO IMPROVE EFFICIENCY AND PRODUCTIVITY

defense, we would and should do it altogether. Implementing centralization in

consumer loan segments is therefore expected to be beneficial to support three
pillars of Bank Mandiri: Business Unit, Risk Management and Operation.

Pro Decentralized Operations

Previously, credit process of consumer loan was one stop merchant banking. All
processes from end to end was under one roof...... from sales & marketing, to front
end until back end done in one roof...... ( Note: more elaboration of previous one
stop merchand banking operation )
From sales and marketing perspective, centralization was not an option since each
sales team should directly meet face to face with his / her customers in his / her area
or regions. However, from credit process point of view, decentralization has several
drawbacks. There were several disadvantages of the previous decentralization credict
process system. First of all was from number of employees responsible in credit
process. Bank has set certain number of officers/employees engaged for each
consumer loan type. However, from demand side, incoming applications from each
type of onsumer loan could be different. It will cause load unbalancing in the credit
process as one officer will have more load than the others and vice versa. And this
load unbalancing did not occurs only internally in one particular branch, between
consumer loan types, but it also occurs between branches or region.

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PT BANK MANDIRI (PERSERO), Tbk: CENTRALIZED OPERATION

IMPLEMENTING LOAN
ORIGINATION SYSTEM TO IMPROVE EFFICIENCY AND PRODUCTIVITY

About the Author

First Author

Dian Triasurya earned his Bachelor and MBA degree in Finance from
University of Houston and University of North Texas, USA. Having
twenty years of experience in fields of Accounting & Finance, he
started his career as Accounting officer in Bank Nusa Nasional in 1993
and later as Corporate Planning and Financial Analyst in the same
bank. Other than banking experiences, he worked in capital market as
Fixed Income Dealer and has Invesment Manager Licensed from
Bapepam in 2003. In addition, he also worked in Monsanto Indonesia
and Danone Indonesia as Business Analyst Manager. Passionate with teaching has
brought him to BINUS International as Head of School of Accounting and Finance.
Currently, he is a senior facilitator in Continuing Education - BINUS Business School;
conducting financial training for ASTRA groups, KRAFT Food, Bank Commonwealth,
Bank Mizuho, Aetna, Bumitama Gunajaya Agro, PLN, Mulia Industrindo etcetera. He is
also co-founder and now running PT. Berkah Capital, an aset management company
which has several business units.

Second Author
Netta J. Sjafei earned her Master Degree in Management from
the IPMI International Business School and MBA Degree from
Monash Mt Eliza, Melbourne, Australia, after completing her
Authors
Undergraduate Degree in Financial Management at the Faculty of
Photo
Economics University of Indonesia.
She has more than 18 years of experience in Marketing, Branding
and Corporate Communication. She started her career as Preferred
Account Executive at Chase Manhattan Bank and later on as
Product Manager at Citibank Cash Management, Account Manager at Ogilvy
Advertising, General Manager at AdVenture Indonesia, VP Branding & Corporate
Communication at General Electric (GE) Consumer Finance and Marketing, Public
Relations and Admission Director Swiss German University-Asia. She also ownermanaged Insight Asia Strategic Consulting, servicing clients such as Pertamina, Inco,
Trakindo, Charoen Pokphand, Ernst & Young, Pondok Indah Group and Sultan Hotel
Jakarta.
Since 2000 while she was working in GE she has been teaching part time for IPMI
International Business School, Binus Business School and in 2007 as Head of School
of Business Administration at Swiss German University-Asia. Currently she is the
Dean of Students of Binus University International and the Students, Alumni and
Global Employability Manager of Binus Business School, lecturing Integrated
Marketing Decision Making for MM Executive class and Pricing Strategy &
Management for Undergraduate School of Marketing.

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