Business Model and Strategy for Sustainable Lending of State-Owned Banks in Indonesia

Kepas Antoni Adrianus Manurung (), Hermanto Siregar, Dedi Budiman Hakim, Idqan Fahmi and Tanti Novianti
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Kepas Antoni Adrianus Manurung: School of Business, IPB University, Bogor 16151, Indonesia
Hermanto Siregar: Department of Economics, Faculty of Economics and Management, IPB University, Bogor 16680, Indonesia
Dedi Budiman Hakim: Department of Economics, Faculty of Economics and Management, IPB University, Bogor 16680, Indonesia
Idqan Fahmi: School of Business, IPB University, Bogor 16151, Indonesia
Tanti Novianti: School of Business, IPB University, Bogor 16151, Indonesia

JRFM, 2024, vol. 17, issue 9, 1-31

Abstract: Currently, banks are facing challenges in fulfilling the interests of stakeholders, not only from an economic point of view, but also in terms of environmental, social, and governance (ESG) aspects. This is due to the increasing concern for sustainability issues, including lending activities. Lending activities constitute the largest portion of bank assets and are the largest contributor to bank revenues. Thus, banks need certain business models and strategies to encourage sustainable lending growth; otherwise, it will be difficult for banks to fulfill stakeholder’s interests and support sustainable development goals. This study aimed to build a sustainable business model and select sustainable lending strategies in state-owned banks in Indonesia using a value chain approach. The development of a sustainable business model utilizing a triple-layer business model canvas (TLBMC) is based on the results of previous research and sustainability report data of the three state-owned banks. The formulation of strategy selection as the key driver of sustainable lending utilized the analytical hierarchy process (AHP) based on expert respondent data collected through questionnaires. This research showed that the lending distribution business model at state-owned banks in Indonesia, which was built using the TLBMC framework, can realize sustainability goals in the form of a sustainable lending business model. Furthermore, this sustainable business model can be used as a basis for selecting sustainable strategies. In addition, the AHP results yielded alternative strategies in the form of the market development and penetration of green loans and micro, small, and medium enterprises (MSMEs) as the key drivers of sustainable lending growth.

Keywords: commercial bank; value chain; business model; business strategy; sustainable lending (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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