In July 2016, an Indonesian bank BRI (Bank Riakyat Indonesia) became the first bank in the world to own its dedicated satellite. The satellite, named BRIsat, was launched to provide communications for BRI’s banking services and business operations.
BRIsat was launched to allow for the bank to reach to additional customers, support existing clients and transmit information in real time as they need to instantly update their internal accounts. The latter need is currently a priority, as greater numbers of financial transactions are completed at a higher frequency per customer.
Banks need to be able to connect their physical points of presence (branches, kiosks and ATMs) together as customers require up to date accounts whether they are walking into a branch, withdrawing money at an ATM or logging onto their personal accounts online. As long as the physical sites exist, the banks will always rely upon B2B (business to business) communication infrastructures to account for this traffic.
When looking at data transmission in this industry and understanding which platforms of communication (fibre, satellite, mobile) are best suited to provide this traffic, the spread of ATM’s and branches and the frequency of use of these applications is a key factor to consider.
Although there is a clear pattern that banks globally are shutting down branches and ATMs, as the end user switches to online and mobile banking, there are regional differences in this decline. These regional differences are predominantly affected by how developed the terrestrial infrastructure ecosystem is and what capabilities it offers to the bank and the end customers in a given country/region.
It is expected that ATMs and branches in developing regions will decline at a slower rate than regions which are more developed. This decline is expected to differ purely because a greater proportion of people who bank in less economically developed regions are restricted to being able to bank online by a lack of opportunities to access online content via a connected device.
In regards to the platforms of communication used to transmit the banking data, although terrestrial wireline is dominant, the geographical structure of South East Asia does not heavily favour fibre cabling in a lot of places. In the Indonesian archipelago the roll out of fibre cabling has been challenging because connecting the 17,000 islands is proving timely and costly. Therefore there is a need from the banks to find an alternative to connect their physical points of presence across this relief if they wish to expand their current services, and tap into the non-banking population who don’t even have access to ATMs and branches, let alone the ability to bank online.
With only 40% of adults in Indonesia possessing a bank account, BRI expects satellite to be this alternative to target this non-banking population. BRI is Indonesia's largest lender of small loans, in a country containing just fewer than 60 million registered SME’s (Small Medium Enterprises). On top of this BRI has close to 9,000 conventional sites (head offices, branches, sub branches, mobile branches, floating branches), above 20,000 ATM’s and 50 million customers spread out over a latitude of 3,000km. Due to the nature of BRI’s geographical reach, satellite transmission allows the bank to maintain live communication with all of these points of presence in its network.
BRIsat is projected to remain in operation for up to 18 years and was forecasted to equate to $250 million dollars in total costs for the spacecraft build and its launch. Prior to solely relying on BRIsat, BRI leased out 23 transponders through 9 operators, which it approximately paid $35 million a year in total to provide connectivity to their physical points of presence. BRI will now use 36 x 36 MHz C-band (which will serve the financial transactions) and 9 x 72 MHz Ku-band transponders (to serve non-financial communication). It is forecasted to reach the payback point during year 6 of the satellite’s operation life cycle. The final use of the satellite is expected to see BRI use of around 82% of the satellite’s capacity with remaining capacity provided for the Indonesian Government.
Within the banking industry in Asia, terrestrial wireline (fibre and copper cabling) is currently the most prominent platform by close to 10 times the nearest platform, terrestrial wireless. This gap is only going to increase over the next 15 years as fibre is predicted to pick up the vast majority of the increase in financial data (transactions, customer account info, back office data etc.) transmitted by the banks in the future.
Looking at the technical requirements from the banks, they demand and will continue to demand very low latency. For this reason satellite transmission in this industry is expected to increase at a slow rate compared to terrestrial wireline.
Looking closer at satellite transmission in the banking industry in Asia, GEO (Geostationary Earth Orbit satellites) is currently leading the way, but over time as MEO (Medium Earth Orbit satellites) and LEO (Low Earth Orbit satellites) technologies mature, non-GEO is forecasted to become the leading platform in satellite to the banking industry.
With Indonesian banks leading the way for satellite transmission in the banking sector, in Asia, countries such as the Philippines and Thailand have similar geographical structures and are at a similar point on the mobile and fibre timelines as Indonesia, suggesting satellite transmission could pick up in the region. Furthermore Indian and Pakistan banks are also leasing a noticeable amount of satellite capacity at the moment, suggesting there is cause for satellite transmission in the banking industry in Asia.
Overall, the percentage splits seen across the platforms of communication in Asia, serving the banking industry, will remain heavily weighted towards terrestrial wireline Satellite however could see some momentum gained, thanks to BRI’s recent pioneering steps taken, but also thanks to technology innovations around satellite manufacturing that are already dramatically reducing the cost of launching.