Abstract:

Banking efficiency is still a concern for many stakeholders in Indonesia, especially with the challenges of recovering after the huge impact of the pandemic COVID-19. This study estimates the value of banking technical efficiency using Stochastic Frontier Analysis before and after the peak of Pandemic COVID-19 and identifies key problems from the pandemic related to credit risk and portfolio switching. A set of solutions emerge mainly from the learning and growth perspective to improve employee competencies; from internal processes to improve organizational effectiveness; from the customer’s perspective to digitalize banking processes and products; and finally from the financial perspective to focus on asset growth using a robust portfolio guideline. Hence, revising risk appetite statements for all significant products is also a key to effective and efficient business growth for recovery.