CHAPTER IV INTERNAL ENVIRONMENT

a. Corporate Structure
b. Corporate Culture

Trust

To instill confidence in stakeholders through open and sincere

relationships based on trustworthiness

Integrity

To think, speak and act truthfully, with dignity and to uphold the
professional code of ethics

Professionalism

Committed to completing work accurately, based on a high level of

competence and with a full sense of responsibility

Customer Focus

To always position our internal and external customers as the primary

partners in mutually beneficial relationships that sustain growth

E Excellence

To always strive to achieve excellence as an expression of our love

and pride as members of Bank Mandiri

The process of internalizing and disseminating our Corporate Culture at all levels of the
organization
(Board of Commissioners, Board of Directors and Employees) has been carried out using
both formal and informal communication, including in-class training, management discussion
and guidance during visits to the regions, sms / e-mail blasts, articles in the banks internal
magazine, teleconferencing, video tapes, and so forth. The communication program was
implemented on an Intensive and continuous basis from 2005 to in 2013, with Culture
Specialist Group acting as the coordinator of the program. in addition to Internal socialization
within Bank Mandiri, the corporate culture has also been socialized in the Banks
subsidiaries. Under the Bank Mandiri Long Term Plan, 2010 to 2014, the Banks VISION is
To be Indonesias most admired and progressive financial institution. This reflects the
Banks determination to be a financial institution that is always fully committed to building
relationships with all its customers through the provision of innovative financial solutions of
a world-class standard, and to participating in and contributing to the life of the nation
through consistent improvements in financial performance.
Cultural Transformation
Extraordinary targets will never be achieved without extraordinary efforts. Our business and
cultural transformation processes are two sides of the same coin and cannot be separated one
from the other.
Without a strong culture, strategies cannot be implemented or at the very least their impacts
are likely to be insignificant so that the transformation process will end in failure.
To complement the transformation process, Bank Mandiri further refined its Corporate
Culture through a series of discussions involving all levels of senior management at Bank
Mandiri. Themed The New
Horizon, the results of the discussions further spelled out our TIPCE values in the form of
11 Key Conduct guidelines, namely:

1.
2.
3.
4.
5.
6.
7.

Honesty, sincerity, transparency and frankness

Empowering potential, no silos, continuously seeking synergies, and mutual respect
Discipline, consistency and fulfillment of commitments
Thinking, speaking, and acting in a commendable manner
Reliability, resilience, responsibility, willingness to learn, and self--confidence
Spirit of intrapreneurship and courage to take decisions based on measurable risk
Identifying the needs and desires of customers in a proactive manner and providing

holistic solutions to such needs and desires

8. Providing the best possible service in a fast, precise, straightforward and accurate
manner while always prioritizing customer satisfaction
9. Patriotism, a winning mentality and the courage to make a breakthroughs
10. Innovative in creating opportunities to perform beyond expectations
11. Focus and discipline in implementing Priorities

c. Corporate Resource
1. Marketing
In promotion and marketing, the Bank uses the 360 Marketing Strategy as a
guideline that serves as the basis of a variety of marketing strategies for customer
contact point using both the conventional and digital media, and for assessing the
success of marketing programs. In 2013, we continued the marketing initiatives
we applied in 2012. However, we also increased our budget allocation for
marketing on TV and in the print media to below the line level, as well as for
digital marketing, with the focus being on the use of online media, including paid
online media, social media, and microsites. The initiative proved to be effective in
encouraging increased activation of products / programs and in reducing the cost
of promotion. From a marketing aspect, alliances between the Business Units, task
forces and subsidiaries of Bank Mandiri, including as regards the utilization of
media, are important and were further intensified across all segments. In addition,
promotional activities through alliances were also intensified, as was the
development of products and programs tailored to the specific needs of customers.
Looking ahead, communication and marketing alliances with subsidiaries should
be further improved so as to enhance budget productivity and effectiveness, and
increase the market penetration of subsidiaries. Our value chain marketing
strategy has proved effective in sustainably increasing customer deposits and so
should be further intensified. Currently, customer acquisition through a value
chain approach aimed at gas stations, telecommunications providers, and cement,
cigarette, and textile producers has proved to be highly successful. The focus for

the future will be directed at significantly increasing average balances. We also

need to attract more deposits from the public, particularly low-cost funds,
particularly as regards demand and savings deposits. This will be done by
increasing the volume of customer transactions and developing effective
marketing programs. The Export Foreign Exchange (DHE) program will be
intensively implemented by all Business Units so as to directly increase the
collection of foreign currency Low Cost Funds arising from export transactions.
We will also encourage exporters to repatriate export proceeds back to Indonesia.
In the Corporate and Commercial segment, our marketing approach is based on
customer intensification and extensification strategies focused on the potential
funding capacity of SOEs and Government Agencies, which continue to play a
very dominant every year and where the bank enjoys a quite large market share.
The potential flow of funds from government budgets in regions around the
country is also highly prospective. In addition, we also plan to increase the
number of customers outside of the SOE sector, especially customers that are not
specifically related to the state budget. Intensifying the collection of Low Cost
Funds is also carried out by increasing the number of transactions by existing
clients so as reduce dependence on SOE funds, which are characterized by quite
high levels of volatility. Our growth will focus will also be directed at increasing
the number of new customer accounts, especially by corporate business
customers, whose transaction and deposit levels continue to grow sustainably.
Bank Mandiri always encourages client borrowers to use checking accounts. As
regards consumer cards, we plan to expand our focus in the future so as to
encompass not only revolving clients but also transactor clients through the use of
new, tailor-made marketing programs. Our consumer card initiative will also be
supported by the development of innovative marketing programs, improved the
quality of service, new customer acquisition, expansion of focus to second -tier
cities, increasing the number of active accounts, stabilizing the approval rate, and
selecting programs and merchants that have the potential to increase the
transaction and revolver rate. Meanwhile, to increase the volume of consumer
loan sales, our monthly incoming application improvement initiative needs to
applied sustainability, accompanied by increasing the number of developer PKS
and the disbursement level, and stabilizing the approval rate.

In the retail business segment, the focus will be directed at improving the growth
in savings and demand deposits through an intensification strategy aimed at
existing customers. Our focus will also be directed at increasing the number of
new customer accounts, in particular by business customers that actively engage
in transactions and are characterized by sustainable growth in deposits. Another
aspect of marketing that is equally important is to encourage each Business Unit
to conduct better customer targeting, to get to know their customers well and to
familiarize themselves with the competition situation in each region so that their
marketing strategies can work effectively and efficiently. These capabilities are
highly strategic in enhancing the responsiveness of the organization to the market,
thereby allowing the organization to avoid being marginalized due to an inability
to deal with increasingly tight competition.
2. Finance
Capital Structure

Assets increased by 16.63% to Rp855.040 trillion over the previous year

amounting to Rp733.100 trillion
Lending increased by 12.18% to Rp529.973 trillion over the previous year
amounting to Rp472.435 trillion
Net Pro fi t increased by 9.16% to Rp19.872 trillion over the previous year
amounting to Rp18.204 trillion
Revenue rose 11.66% to Rp56.882 trillion compared to the previous year with the
contribution of Net Interest Income 73.51% and 26.49% Fee-based Income
3. Human Resource

Developing world-class human capital imbued with the spirit of national

prosperity
Bank Mandiri continues to transform itself in the area of human capital through
accelerated human capital value creation and the development of strategies and
policies that support Bank Mandiris progression from a Good Company to a
Great Company. In 2013, human capital management at Bank Mandiri focused
on improving the quality of human capital so as to encourage continuous
improvement in Banks performance. To that end, a Human Capital Program has
been formulated based on the theme Aligning the Human Capital
Management System toward Best in Class Practices based on Employee
Value Proposition. Bank Mandiri has adopted an Employee Value Proposition
(EVP) that serves as a noble purpose for staff working at Bank Mandiri. The
Mandiri EVP was developed based on the aspirations of our employees,
combining the aspirations of our employees with what can be given by the
company. The Mandiri EVP describes What it means to be a Mandirian. The
Mandiri Spirit of National Prosperity is summarized as follows: At Mandiri, we
are imbued with the Spirit of National Prosperity, which allows us to grow in an
open, positive and progressive environment so as to promote the prosperity of our
partners, families, customers, communities and Indonesia as a whole. The
Mandiri EVP provides added value to the company through increased levels of
engagement on the part of both employees and customers of Bank Mandiri. It also
offers a high level of competitiveness in attracting the top talent in the market and
to retain such top talent in Bank Mandiri, thereby reducing the rate of employee
turnover, improving the image and reputation of the Bank as an employer of
choice and ultimately improving the companys intangible assets.
From the employee perspective, the Mandiri EVP makes employees feel they are
an important part of the organization, and that every role or duty they perform
contributes to the advancement of the organization, clients, families, communities
and Indonesia as a whole. The EVP also provides employees with the opportunity
to optimally apply their skills, to develop themselves individually and
professionally, and to be rewarded in accordance with their competencies and
performance.
Based on the Spirit of National Prosperity, Bank Mandiri has formulated its vision
and aspiration of becoming the best bank in ASEAN by 2020. This vision and
aspiration will be set out in the 2015-2020 Corporate Plan, with the key

to its successful achievement being top quality, competent, productive and

engaged employees, and a strong and resilient work culture.
Human Capital Strategy
It is recognized that in order to realize Bank Mandiris 2010-2014 vision of
become Indonesias most admired and progressive financial institution, it is not
enough to simply focus on the financial aspects. Rather, the non-financial aspects
also need to be improved through good human capital management (people are the
power behind our purpose).
The Bank Mandiri Human Capital Management Strategy is applied having regard
to prudential principles, risk management, good corporate governance, effective
best in class and the Mandiri Employee Value Proposition and the Spirit of
National Prosperity. Our strategies in the Human Capital field have been aligned
with Bank Mandiris strategies, namely, focusing on entire employee lifecycle
value chain management. The stages in the employee lifecycle consist of
organization development, capacity fulfillment, learning & development,
employee relations, rewards and performance management and talent &
succession management. During every stage of the employee lifecycle, 2 (two)
things are developed so as to ensure continuous application, namely:
1. Developing a culture and leadership that supports the transformation, including
changes in mindset and behavior, and increasing the role of culture & leadership
in the human capital management process.
2. Developing strategies and implementation tactics, including policies, processes,
and employee and technological support capabilities support (Strategic & Tactical
HC Practices)The scope of the employee lifecycle or human capital management
framework may be described as follows:
1. Organization Development - development of an organization that is efficient, effective
and competitive
2. Capacity Fulfillment Obtaining reliable Human Capital both from internal and external
sources.
3. Learning & Development - the development and training of Human Capital to support
business needs
4. Employee Relations--building engagement and harmonious industrial relations

5. Rewards & Performance Management top-quality performance management and

competitive rewards system
6. Talent and Succession Management--the establishment of a leadership pipeline and
succession management.

Bank Mandiri employee staff in units throughout Indonesia. In order to ensure

equal opportunities for people from the regions--from Sabang to Merauke--to
work at Bank Mandiri, recruitment is conducted in collaboration with various
leading universities in Indonesia through job fair / campus hiring. In addition, we
also

pos

employment

vacancies

on

the

Bank

Mandiri

website

(www.bankmandiri.co.id). On average each year, Bank Mandiri hires some 4,000

new employees to anticipate business growth and to replace employees who retire.
Bank Mandiris Capacity Fulfillment Strategy consists of 2 (two) focuses, namely:
1. Bank Mandiris internal resources through the following employee development
programs: Staff Development Programme (SDP), Local Staff Development
Program (LSDP), Employee Authority Holder Program (P3K), Micro Young
Leadership Training Program (PPMM), and the transfer of personnel from Front
Office to Back Office.
2. External resources, through the hiring of fresh graduates and experienced
bankers at the senior management level. Capacity fulfillment through external
resources is conducted having regard to specific issues and conditions, including a
scarcity of senior management resources in particular areas, and the type of work
and expertise involved, as described below:
a. Leadership Capacity Fulfillment in Particular Areas

Taking into account the limited number of senior management candidates

available in particular areas, 2012 saw the introduction of the Papua Region
Special Leadership Candidates Program (CPKP), whose participants consist of
native Papuans or migrants who have long been resident in the Papua region.
Bank Mandiri has also developed a the Regional Officer Development Program
(ODP Pegawai) for areas such as Kalimantan, Sulawesi, and Sumatra.
b. Capacity Fulfillment in respect of special expertise / skills
To support the growth of Bank Mandiri and the achievement of its targets, we
collaborate with executive search agencies to as to assist in the recruitment of
persons who are expert in certain areas, such as information technology, so as to
fill positions in executive management and middle management.
c. Outsourcing
To meet the need for manpower, especially in the case of work that is auxiliary in
nature, the use of outsourcing has increased in line with our rapid growth. In 2013,
we conducted a review of our outsourcing policy in order to ensure that it
complies with Bank Indonesia regulations and labor regulations. The review was
conducted in collaboration with banking associations PERBANAS and
HIMBARA and was intended to improve the monitoring of outsourcing.
d. Mandiri Development Program
The Mandiri Development Program is an integrated work and learning program
for high school students and university students / graduates that provides an
opportunity to learn what it is like to work at Bank Mandiri.
e. Expatriate Manpower
The hiring of expatriate manpower is based on organizational needs, the
availability of suitable candidates in Indonesia and other matters, having regard to
the law and regulations governing the use of expatriate manpower. In accordance
with Bank Mandiri policies, the use of expatriate manpower is permitted in those
areas that require specific qualifications that are not currently available to the
Bank. Bank Mandiri assigns local staff to partner with expatriate employees so as
to ensure that transfer of knowledge takes place.
4. Information System
The risk management system has been developed to support greater efficiency in
business processes so as to speed up the decision-making process while at the
same time adhering to prudential principles. In order to maintain the integrity and
quality of data, Bank Mandiri has established an Integrated Processing System and
Loan Origination System which is designed to improve the efficiency of the
lending process and maintain data quality in the corporate, commercial and retail

segments. The system also includes an Integrated Collection System to improve

collection productivity, particularly in the consumer and retail segments. For
treasury and asset & liability management, Bank Mandiri uses the Summit System
and the Sendero System to manage its trading book and banking book risks. So as
to provide an an accurate overview of the Banks risk profile as parent company
and Ita risk profile as consolidated and integrated with its subsidiaries, Bank
Mandiri has established the Bank Mandiri Risk Profile System (RPX), which is a
web-based system that is designed to accelerate access and simplify control. To
integrate risk management on a bankwide basis, Bank Mandiri has adopted the
ERM system so as to facilitate the holistic monitoring of risk management,
including calculating the capital needed to cover all types of risk. The ERM
system has the capacity to calculate capital charges (using the Standardized
Approach and Advanced Approach), and to apply operational risk management
tools, active portfolio management, stress testing and value-based management.
Improving Shared Service Capacity to Enable the Best Transaction Bank was
the theme of the transformatif process in the Directorate of Technology &
Operations in 2013, reflecting our work ethic in supporting Bank Mandiris goal
of becoming Indonesias transaction bank through the development of
innovative solutions, better products and fast, accountable and reliable services.
The transformation in the Directorate of Technology & Operations applies to the
technology, operational, and service aspects. Technological support is reflected
through the application of IT initiatives so as to generate innovative products and
services in the Bankss three business focus areas: Retail Deposit & Payment,
Wholesale Transaction and Retail Financing. In addition, various initiatives have
been taken to anticipate significant transaction growth, including the consolidation
of operational and business units, and the development of operasional networks to
support business growth. The Technology & Operations Directorate ensures that
Bank Mandiri is always ahead of its kompetitor by maintaining the quality of
services in all Bank Mandiri units, as showing by the fact that 2012-2013 saw
Bank Mandiri receive the Best Bank Service Excellence award for the sixth
consecutive time.
Information Technology Support and Innovation
The process of implementing information technology transformation (IT) is
described in the IT Strategic Plan (ISP) for 2011-2014, which is derived from the
Corporate Plans IT development strategy. The Strategic Plan requires the

Technology & Operations Directorates IT Unit to work closely with the business
units to ensure synergies with the needs of business lines and to support the work
programs of the business units. In the Retail Deposit & Payment focus area, the
Bank has developed a Mass Prepaid System to support the prepaid card business
and the modernization of Internet Banking. In addition, customers can also access
Bank Mandiri services at various contact points, such as 11,514 ATMs, 230,352
EDCs, and 2,050 regular and micro branch Office throughout Indonesia. Bank
Mandiri is also strengthening the Wholesale sector by way of stabilization and
enhancement of Payment and Cash Management Sistems. As for Retail Financing,
Bank Mandiri has improved the processing capacity of the Loan Factory in
order to enhance the effectiveness and efficiency of the leding process. The Bank
has also developed a Micro Loan Originating System to meet the needs of
business processes and micro business models.
To meet the needs of all our customers in Indonesia, Bank Mandiri is always
committed to providing the Best products and services. One of the innovations
that is being continuously developed is e-money. In 2013 Bank Mandiri developed
e-money Info, which is an NFC (Near Field Communication)-based application
which allows users to check the remaining balances in Bank Mandiri prepaid
products by simply attaching their prepaid cards to the back of their smartphones.
Furthermore, e-money info can help users find the nearest merchant locations that
support transactions using Bank Mandiri prepaid products. This year, Bank
Mandiri also started the Development of a non-card form factors as a market
differentiation and segmentation strategy, namely, an e-money wristband
developed in collaboration with Wonders Water World Medan.
Another innovation that came on-stream in 2013 was Mandiri e-Cash, a mobile
application that gives users the sensation of having cash in your mobile phone.
With Mandiri e-Cash, customers conduct transfers and payment transactions using
their phone instead of an account number, as would be needed in the case of the
conventional payment system. The ease that this provides to customers is expected
to drive the growth of the cashless society. It affords a practical, safe and
comfortable way of making such transactions, and also saves taxpayer funds that
would otherwise have to be used for the printing and destruction of banknotes.
Bank Mandiris focus on innovation is a further proof of our spirit of national
prosperity.