Business Process Improvement and Capital Budgeting Analysis to Develop the Digitalization Process of Loan / Financing in Bank Sumsel Babel

: PT Bank Pembangunan Daerah Sumatera Selatan dan Bangka Belitung (brand name: Bank Sumsel Babel) is one of the regional state-owned enterprises (SOEs) engaged in the banking sector. As a local company with a great purpose, Bank Sumsel Babel has a big responsibility to support all industries in the region province of South Sumatera and the Bangka Belitung Islands. This study examines the downward trends in credit and financing activity over the previous five years, particularly in working capital and investment credit at Babel Sumsel Babel branches. These two credits assess how successful regional banks are at boosting the local economy. On the other hand, the Bank has seen a decrease in market share in its multi-purpose credit products to civil servants in the South Sumatra and Bangka Belitung islands, where this credit is the primary source of income for Bank Sumsel Babel. This research utilizes qualitative information to determine the root cause and improve business processes by using the digital revolution of credit and financing to speed up the process and increase microfinance in Bank Sumsel Babel. Furthermore, the capital budgeting analysis to build the digitalization process will be calculated in this study to determine whether the investment is feasible. Based on the findings of this study, it is possible to conclude that Bank Sumsel Babel can use digitalization as a process improvement to secure its niche market and increase lending activities. Finally, this study makes recommendations for internal management on implementing the credit and lending digitalization process.


INTRODUCTION
Time values are more important than before, and modern consumers require a service for equivalent time-saving options in a similar way to reduce operating or daily costs.Because of shifts in consumer behavior, establishing digital services is more than just a trend for the financial industry.As a result, the banking industry has evolved to meet modern consumers' needs better.In addition, traditional banking methods must evolve to accommodate mobile-led digital banking, which is increasingly important in customer service.Since the epidemic, the digitalization business has become crucial for sustaining the overall economy.As the Indonesian economy grows, it will require digital support to maximize service and performance.According to 2021 data from the Indonesian Central Bureau of Statistics, smartphone penetration in Indonesia has gradually increased over the past five years.Furthermore, according to data from the website www.newzoo.com,Indonesia jumped from 46th to fourth place on the global list of countries with the most Internet users.This information demonstrates how Indonesian residents' behavior is evolving quickly and responding to the demands of modern living.
Modern digital technologies are rapidly evolving.However, due to the high cost of establishing an Information Technology system, not all banking institutions can equip their plans with the most advanced technologies.Satisfying customers with the latest high technologies is a requirement for the Indonesian big four banks (KBMI 4 (Bank Groups based on core capital 4): Bank Mandiri, Bank BCA, Bank BRI, and Bank BNI).Because their competition is entirely different in level compared to other banks, these banks are already providing services to their customers at the fourth (augmented product) or fifth (potential product) level.On the other hand, hundreds of Indonesian banks classify as middle-low, according to POJKNo.12/POJK.03/2021.Furthermore, most banks serve similar product levels, offering customers third level (expected product) or second level (primary outcome) products.Therefore, many have needed help to maximize their services through cutting-edge digital technologies.In addition, many banks need help to keep up with the most recent technologies due to the rapid change in customer behavior brought on by digital applications.They primarily focus on the ROI or efficiency of establishing Information technology systems and whether to invest in technological advancements.As a result, maximizing efficiency through digital technology has emerged as the key to increasing bank efficiency across all bank categories.However, middle-class, and low-class banks must determine whether investing in an Otherwise, when Bank Sumsel Babel's credit/financing data divides into several categories, the data shows that issues cause irregular performance-starting with Bank Sumsel Babel Credit/Financing data that has been adjusted for impairment losses.This table summarizes credit/funding data after impairment.Government programs, on the other hand, have the highest CAGR of more than 100%.Credit KUR and assistance to citizens in purchasing new homes are two government programs primarily aimed at the lower-class economy (credit FLPP).Otherwise, because the government can limit the interest rates offered to its customers, this category needs to provide an adequate net interest margin to Bank Sumsel Babel.Syndicated loans came in second, with a 57% CAGR.The headquarters staff handled syndicated loans, typically large, with the corporate level as the category's target customer.On the other hand, working capital and investment loans and financing decreased.Furthermore, unlike government programs, these two productive loans/finances have no restrictions, allowing the Bank to create these products based on the needs, processes, and even interests of its niche market.As a result, branches are more likely to run in these two categories.However, the trend of credit distribution and revenue for these items has slowed in the last few years.Therefore, management must address this issue to stimulate the local economy by offering appropriate solutions for increasing working capital and investment credits.In addition, Bank Sumsel Babel also has significant problems with consumer credit.Furthermore, when the consumer credit data is broken down into several categories, the data show that multi-purpose credit (credit Serba Guna (KSG)) has dominated consumer credit for the last five years, accounting for approximately 90% of the total.Outstanding consumer credits, particularly multi-purpose credits (kreditSerba Guna (KSG)), clearly appear to be very good, with the outstanding amount increasing yearly.However, there is a significant issue in disclosing data on the number of accounts (market share was declining), and total revenue has continued to grow negatively over the last five years.Following these trends, the authors surveyed branch employees quickly (levels of administration officers, credit/financing/risk analysts, and legal officers).According to the data, the following: 1. 88,7% of respondents said that the current constraint in marketing credit/financing products of Bank Sumsel Babel is a process of credit/financing.Furthermore, they assumed that the customer potential is enormous.Still, the process from analysis to decision, which includes customer data entry, L.O., consulting, SLIK, guarantees, risk analysis, and repayment ability calculation at the main body, takes a significant amount of time.2. 91,1% of respondents said that the current constraint process of credit/financing needs to be improved so that services can be maximized/targets can be achieved.The procedure is divided into several steps, such as the first step of entering customer information, the second step of analyzing the process after the file is completed, and the third step of decision-making authority.3. 78,5% of respondents said that when Bank Sumsel Babel digitally changes their loan application system via web/application, it adds value to the process (analytical process, committee decision-making process, up to loan agreement).As a result, Bank Sumsel Babel's top management should focus on resolving these issues so that Bank Sumsel Babel can increase its market share of government employees for consumer loans and increase the capacity of productive loans/financing without negatively impacting revenue.Furthermore, because numerous factors contribute to the problem, this final project focuses on improving the business process by implementing a digitization strategy and calculating the investment in the capital budgeting framework.Digital methods help Bank Sumsel Babel provide the best possible service to its customers, including explaining any products that meet their needs, requirements, and procedures.Then, it also helps customers to know the amount of financing they require and whether or not their specific payment capacity is appropriate, credit analysis, digital signing (e-signature agreement), and so on.

LITERATUR REVIEW I.
Business Process Improvement Improving business processes was intended to increase efficiency in providing value to customers.Furthermore, in Bank Sumsel Babel terms, reducing wait times, reducing queues, speeding up analytical processes mandated by procedural standards, and integrating online reporting processes and digital signatures using technology devices.Therefore, business process improvement is an essential component of organizations and a significant driver of business digital transformation.According to Eric Kimberling, CEO of Third Stage Consulting Group, there are five steps to improving business processes, according to www.thirdstageconsulting.com. 1.
An appraisal of the current state.This stage investigates the current operation to identify its strengths and weaknesses, emphasizing its problem areas.

2.
Define future state.Identifying the current and future state of business processes is critical to improving them.It starts with the bottleneck, which analysts identified as a source of pain in the current state assessment.This is the outcome of process mining and analysis, which identifies and recommends opportunities for improvement.

3.
Define Performance Metrics.Performance metrics are integrated into a business case, which assists analysts in describing future states, the benefits achieved, and the overall business value of the project.Finally, consider how business processes can benefit from process improvement.

4.
Identify and prioritize improvement.Make a list of all potential business efficiency improvements the company could implement.Prioritizing possible process improvements will allow it to be determined which aspects of phase deployment should be prioritized and how.

5.
Create a process improvement plan.This procedure involves determining where the list will be prepared and the characteristics of those improvements.This step is just as crucial as creating the documents because it also entails creating a more specific plan for putting these changes into practice and fully understanding potential correlations between job duties and responsibilities.

II.
Capital Budgeting Analysis 1.The Cost of Capital.It represents the cost of raising capital for investment purposes, also known as the target rate of return or the hurdle rate.The terms cost of capital and the weighted average cost of capital (WACC) are similar: a. Cost of Corporate long-term debt.The financing costs associated with funds raised through long-term borrowing are referred to as long-term debt costs.Typically, funds are raised through the sale of corporate bonds.b.Cost of Preferred stocks.Preferred stock is a type of company ownership share that differs from common stock.Preferred stockholders have the right to receive their stated dividend payments before the company distributes any earnings to common stockholders.c.Cost of equity (common stock).The cost of common stock is the return required in the stock by market investors.
Common stock can be financed in two ways: (1) through retained earnings and ( 2) through (new) common stock issues.
(1) Cost of Retained Earning.Earnings retention is accepted by stockholders only if they believe the company will earn at least the required return on reinvested funds:

Risk-Free Rate Investment Instruments in Indonesia
In Indonesia, there are many options for risk-free rate investments, but typically deposits and state bonds are considered part of risk-free investments.

Weight Average Cost of Capital.
Multiply each financing form's individual cost by its portion in the firm's capital structure and sum the weighted values.

Capital Budgeting Cash Flows a.
Finding the Initial Investment.The initial investment associated with a capital expenditure is calculated using the installed cost of the new assets, the after-tax proceeds (if any) from the sale of an old asset, and the change (if any) in net working capital.b.Finding the operating cash flows.Operating cash flows are the additional, after-tax cash flows that develop following new investment.c.Finding the Terminal Cash Flows.The cash flow generated when a project is terminated and liquidated at the end of its economic life is referred to as terminal cash flow.It is the after-tax cash flow, excluding operating cash flows,that occurs in the final year of the project.

CONCEPTUAL FRAMEWORK
The research framework is a sequence that incorporates theories, hypotheses, assumptions, or principles that contribute to the research process.By delivering the series to readers in stages, the framework helps them interpret the research.The diagram below shows the exploration system used in this review.

RESEARCH METHODOLOGY
The researcher gathered both primary and secondary information.Data that have recently been collected for a specific goal or research project are referred to as preliminary data.Secondary data, on the other hand, are data that were collected for another purpose and already exist somewhere.To identify business issues, the author uses secondary data analysis to identify reports from the Bank Sumsel Babel annual report, internal financial reports, Standard of Procedure, and so forth.Secondary data give a starting point and details about the various credit/financing trends that took Bank Sumsel Babel along the different paths.Meanwhile, the primary data sources are internal Bank Sumsel Babel data, interviews with Bank Sumsel Babel specialists and other project participants, and questionnaires to the employee.After gathering data, the next step is to create a new solution as well as a calculation based on the projections.The measure will generate capital budgeting metrics as well as an acceptable range for each sensitivity analysis assumption for the feasibility study.The results of these calculations and financial modeling will be reviewed, and recommendations and an implementation plan will be developed.After carefully evaluating secondary data sources, qualitative research designs can be used independently or in an iterative process in conjunction with secondary data sources.The idea that qualitative and quantitative research complement one another rather than being in conflict with one another is a sound one for business research.The quantitative approach is used in this thesis to identify the initial hypothesis bottleneck of Bank Sumsel Babel's lengthy existing credit/financing process.The author conducts a survey of all employees (from administrative officers to analysts) in each Branch's credit/financing unit in order to identify the root cause of the recent decline in branch credit investment and working capital, as well as credit multi-purpose market share (KreditKSG).Next, the author utilizes a qualitative method (interviewing and Delphi method).To cultivate deeply about the reason why the problem occurred and determine the assumptions about cost, opinion of digitalization of credit/financing in the Branch, the initial investment, determining (forecasting) cash flow projections, and so on to the level of employee from supervisor to manager in the branches and head office.Furthermore, qualitative techniques (Delphi Method) will be used to calculate forecasting cash flows for capital budgeting analysis.The author attempted to interview some credit/financing head units in each branch class to learn more about the reality of the credit/financing process in the branches, whether the Standard of procedure was followed, or looking for the credit process flowchart.The following steps are currently being taken: Based on the interviews and observations, the author concludes that customers must complete at least nine steps in the Existing Flowchart of the Credit / Financing Process in the Branch in order to receive loans from Bank Sumsel Babel.Furthermore, the author discovered that customers visiting a physical branch must wait 3-4 days.a.
Day 1: (Flowchart 1).The credit application process begins when the customer visits the nearest Branch Office to inquire about loan amount, installment, application requirements, and related fees.b.
Day 2: (Flowchart 2).The customer returns home to complete the requirements on paper (copy paper), which is then submitted the following day to the Bank (Day 2).A bank officer receives the document in order for the Entry Letter to be filed and processed.c.
(Flowchart 3, 4, 5, 6) After verifying data and documents.The process of searching for SLIK data is continued, and the analysis is carried out in accordance with the order of BPP; Legal Officer -Credit Analyst + Risk Analyst, Supervisor, Deputy Branch Manager, and then the process is carried out by conducting Committee D. d.
Day 3: (Flowchart 7 + 8).The signing of SP3K and Credit Agreements In general, the signing of SP3Ks and Credit Agreements for non-KSG/PMG loans does not take place in a single day.This is because the debtor is given time before signing the Credit Agreement to prepare the necessary data and study the contents of the SP3K.e.
Day 4: (Flowchart 9).In most cases, the debtor doesn't receive the cash disbursement immediately because the administrative officer of the legal and financing unit needs to set up a proceeds account, loan account, or debtor financing for additional distribution of money sent to the debtor's account.

2.
Analysis of the difficulties when processing a loan or financing at Bank Sumsel Babel.
The author takes the time to cultivate the central issue in loan or financing processing at Bank Sumsel Babel by interviewing several credit supervisors from various branches of Bank Sumsel Babel in order to investigate the existing flowchart and the reality of operational activities and the results are presented here.The problem analysis step is considered the first step in the business improvement process before moving on to the solution.The author can incorporate these issues into a system thinking diagram based on the interview report:  The issue of a credit process that is too long and time-consuming is also a concern and is thought to be the primary reason for not withdrawing the credit. Bank frequently receives numerous requests for working capital credit support for construction at times, especially at the end of the year.However, several customers made complaints because there needed to be more available analysts.b.
Issues about strategy. In practice, Bank Sumsel Babel competes with other banks that also seek to employ civil servants.Competitors, for example, dominate this product category of pension credit with a pledging strategy in which debtors receive credit money before retirement age, but installment payments are made when they reach retirement age by giving debtors specific terms (grace period) to control cash flow in the initial investment period. Other branches stated that the growth of KSG's consumer credit had stalled due to an obsolescent strategy that included a low-interest promotion every year for at least the last five years.c.
Interest issue. Bank Sumsel Babel currently uses a flat interest calculation strategy for KSG consumptive credit customers while many competitors use annuity interest. Working capital loans and investment loans are not attractive because the interest expense charged to customers is very high, ranging from 13% to 14% per annum.d.
The problem of Target goal setting  Bank Sumsel Babel is currently not overly focused on developing working capital loans and investment loans due to performance objectives by the head office management, so the scores for the two types of credit are low.Government program loans, on the other hand, are given a higher weight.e.
Credit Decision Authority  Branch leaders' authority in deciding on loans is still considered very limited in terms of the nominal credit that can be extended to customers.f.
Plan code credit type. Several branches also stated that currently disbursing credit from the Sumsel Babel bank is difficult because too many things are administrative in nature, mainly because the head office has implemented multiple types of code plans.

Solution and Proposed Implementation Plan
Following the identification of the problem using primary data, the author attempts to make a proposal, particularly regarding the utilization of digital technology to speed up the entire credit process flow, allowing credit officers to process more credit application proposals and assisting in making credit analysis more efficient.Simple and structured, and save money on paper, electricity, and other resources.The use of digital technology is also considered to support Bank Sumsel Babel in increasing the STAGE 1 (Digital aplication).Bank Sumsel Babel is proposed to develop a digital medium for submitting credit/financing applications, making it easier for customers to apply for loans/financing from Bank Sumsel Babel.In this step, the customer submits an online form via the web/application.

b. STAGE 2 (Digital Process of Analysis and Decision).
After prospective customers input data, the following steps are: (1) Website and application data will be transmitted to the Bank's internal system, the Electronic Loan Organization System (ELOS), which will send a signal to the Branch the customer designates or the closest Branch.(2) Especially for loans that do not use standardized analysis (standardized product) from on-staff.Then it will use a Simple Automatic Analysis (Repayment Capacity) and Scoring System to speed up the approval process, which can be directly checked REALTIME by bank officers, and an APPROVAL request is made to the credit breaker.Maximum Decision Time Can Be Done In Only 2-3 Working Hours.(3) The information entered by the customer through their account on the website and/or this software application has been integrated: ELOS; SLIK system at OJK; Ministry of Home Affairs Population Data; Ministry of Finance data (specifically NPWP); Land Government Office data (if possible, specifically for collateral); other institutional data.(4) The data presented above can be used directly (automatically) by bank officers to expedite the service process.The bank officer, on the other hand, has the authority to correct or adjust the data.Furthermore, bank officers are expected to directly input the following data into the Bank's internal system (ELOS), after which an EXECUTIVE SUMMARY will be available: legal analysis; financial ratio analysis, market ratio; cashflow statement; risk analysis; collateral aspect.(1) After the bank officer did perform data input and analysis, the data is automatically tiered (for review) up to the final breaker and sent to credit supervisors / legal supervisors, deputy branch leaders/branch leaders.(2) The final decision maker may request a circular / online/offline committee meeting to make a decision.d.STAGE 4 (Loan Agreement Signing and Digital Disclosing Process).Following a committee meeting, the system will automatically send prospective customers information on their customer account via SMS/email, with an explanation of the information in the form of types of credit/financing; a number of ceilings; time period; list of guarantees; schedule of credit contracts/agreements; requirements for documents that must be brought; fees, and other terms and conditions.Where applicable, the credit/financing contract process can be completed using a DIGITAL SIGNATURE and an ELECTRONIC tool.

4.
Capital Budgeting Analysis a.The Cost of Equity.Bank Sumsel Babel is currently a closed company, with all of its capital coming from all local governments in South Sumatra Province and Banga Belitung Islands Province, as well as a portion of its capital coming from the South Sumatra Babel Employee Cooperative and retained earnings.In this regard, the author employs the calculation method of The Capital Asset Pricing Model to obtain the appropriate value of the cost of capital, the process of calculating the cost of capital (CAPM).By using the data of these banks, the author estimates the cost of capital following this: Formula 4.a: CAPM Model β x ( r m -R f) ] R s = required return on asset R f = risk-free rate of return, which will be assumed by the Bank Indonesia rate.r m = market return; return on the market portfolio of assets β = beta coefficient or index of non-diversifiable risk for asset b.Risk-Free.The risk-free rate is the risk-free rate of return as a result of receiving a government guarantee that has been adjusted in laws and regulations Bank Indonesia uses the BI 7-day reverse repo interest rate reference, which is Indonesia's risk-free rate instrument.For this reason, the author uses the BI-7 Day Reverse Repo Rate.The average rate of BI 7 day-RR from 21 April 2016 until 22 September 2022 is 4,56%.c.Market Return.Based on the information from Infobank that there are three regional development banks has been offering the stocks to the market (IPO): 1) PT Bank Pembangunan Daerah Jawa Barat dan Banten Tbk (BJBR.JK) 2) PT Bank Pembangunan Daerah Jawa Timur Tbk (BJTM.JK) 3) PT.Bank Pembangunan Daerah Banten, Tbk (BEKS.JK) d.Beta .First, the author attempts to determine the average leveraged beta from three different regional banks by comparing each one's yearly return to the Indonesia Stock Exchange market return.Following this, the levered beta of each regional Bank is recalculated using the Unlevered Beta formula.Formula 4.d.1 : Unlevered Beta Following that, the author attempts to calculate the levered beta of Bank Sumsel Babel using this formula after obtaining the unlevered beta of three different regional banks and averaging these numbers: Formula 4.d.According to Bank Sumsel Babel's annual report, there are three types of long-term debt: 1) Borrowings from Bank Indonesia.These accounts represent borrowings of Bank Indonesia in liquidity credit for granting to Ownership of Simple House Loan (KPR-RS) and Ownership of Very Simple House Loan (KPRRSS).The period for a mortgage is 20 years, with interest rates ranging from 3% to 9%.2) Borrowing from the Government (BLU-PPDPP).House Ownership Loan through Housing Loan Liquidity Facility for low-income communities.The loan is for 20 years with an interest rate of 5%.3) Borrowing from Bank Tabungan Negara -Housing Loan Investment Fund Account.The loan period is 15 years, including three years grace periods with an interest rate from 2% to 3%.Source: Data Bank Sumsel Babel, processed by the author 2022 The next step after obtaining credit and financing Profit and loss is to project future Profit and loss based on historical data.In this case, the author employs an automated projection calculator application with the Tablue system to carry out projections proportionally based on historical data.The system will provide proportional assumptions and projections.The author excludes credit or financing obtained through government funds (government programs).This is because these types of credit and financing are very limited in terms of the ceiling available to customers, with the Bank only receiving a specific ceiling value from the government to be distributed within a single fiscal year.According to the available data, Bank Sumsel Babel consistently achieves 100% of the given target.Hence, the author believes that even though the credit process is being digitized, this type of credit is relatively unaffected in terms of income.The following step is to compute the operating cash flow.At this stage, the writer obtains the assumed value of costs and income from interviews with internal Sumsel Babel Bank employees both at the head office and at the branch office so that the data obtained using the Delphi method is much better.

5) Risk and Refinements in Capital Budgeting
A risk assessment must be performed to determine whether the project is still viable in the face of future risks.The authors employ two methods for calculating risk.

Diagram 6: Tornado Diagram
According to the sensitivity analysis, the multi-purpose credit (KSG Credit) of Bank Sumsel Babel has the most significant influence on the net present value.As a result, Bank Sumsel Babel must pay closer attention to the income generated by these activities in order to keep the NPV of this project in line with the expected results.According to risk analysis, Scenario analysis, and Monte Carlo simulation, this project's NPV can be harmful in the worst-case scenario.However, when the Monte Carlo simulation is run, the possibility of a project NPV 0 is eliminated.In this regard, this project can be continued because it will add value to the company.

CONCLUSION 1. The current lending and funding process at Bank Sumsel Babel.
The detailed internal data which explains of various types of credit and financing in the branches reveals serious issues that require immediate attention from top management.The problem is with multi-purpose credit (KSG), the primary source of income for Bank Sumsel Babel, whose market share has gradually decreased in recent years.Additionally, it will decline from an income perspective after analyzing historical data and future income projections.On the other hand, in the previous five years, working capital loans and investments in traditional branches experienced negative growth.Furthermore, an analysis of the credit income trend shows a significant downward trend in the position of credit income.

Chart 2 :
Revenue of Working Capital Credit and Investment Credit Source : Data of Bank Sumsel Babel: the Year 2017 -2022, processed by author 2022)

( 2 )
Cost of (new issues of) common stock.The rate at which investors discount the firm's expected ordinary stock dividends to determine share value is known as the cost of common stock equity.The following are two approaches to calculating the cost of common stock equity: (a) The Constant-Growth Valuation (Gordon Growth) Model.It assumes that the value of a share of stock equals the present value of all future dividends (assumed to grow at a constant rate) that it is expected to provide over an infinite time horizon.(b) The Capital Asset Pricing Model (CAPM).It describes the relationship between the required return, rs, and the non-diversifiable risk of the firm as measured by the beta coefficient, β.
Analysis.It examines the impact of various variable combinations, known as scenarios, on the project's net present value (NPV) (or IRR).The various methods created for this purpose are as follows: (1) Pessimistic; (2) Optimistic; (3) Most likely.

ISSN
current lending and funding process at Bank Sumsel Babel.

Diagram 2 :
Existing Flowchart of Credit / Financing Process in Branch Source : Interview to employee, processed by author 2022 System Thinking Source : Qualitative Data: Interview to employee, processed by author 2022 Description: a.Credit application procedure.

Diagram 4 :Diagram 5 :
customers who apply for credit, thus increasing the company's value.As a result, the author recommends a comprehensive digital process with the following steps: Proposed Flowchart of Working Capital, Investment and Consumer Loan Source : processed by author 2022 Proposed Flowchart of Multi-Purpose Credits (KreditSerba Guna (KSG)) Source : processed by author 2022 Description: a.

c. STAGE 3 (
Credit Approval Process + Committee).The process of review analysis and proposed credit/financing gradually by credit supervisors / legal supervisors, deputy branch managers/branch leaders are as follows:

ISSN
Application Fee (obtained initial information from the vendors), assuming cooperation with vendors.b.Development of an integrated analysis (starting from the Financial Statements and Financial Ratios) in the form of mic.excel for later use in the application system.c.Training will be carried out to all Yuris, Analysts, AO employees, Credit Admins in all BSB Branches/Capems, through offline training at the Head Office (assuming: IDR 2 million * 250 people).d.Training for minimum 2 IT people from the IT Division so that further improvement and system development can be carried out internally.e. Internal development also includes network development in all branch offices/capitals (if needed) and market survey implementation (Quantitative and Qualitative Survey to BSB Customers.(assuming 5% * total system fee

Table 1 :
Credit Market Share in South Sumatera & Bangka Belitung

Table 2 :
Bank Sumsel Babel Credit / Financing (After adjustment of allowance of impairment loss)

Table 3 :
Bank Sumsel Babel Consumer Loan

Table 4 :
Bank Sumsel Babel Market Share of Consumer Loan (KSG) Source: Internal data BSB 2021 and Government: Statistics, processed by author 2022) Chart 3 : Revenue of Consumer Loan: Kredit Serba Guna Source : Data of Bank Sumsel Babel: Year 2017 -2022, processed by author 2022)

Non-discounted Cash Flow Techniques
Techniques.Investments are made in both short-term and long-term assets, and capital budgeting is primarily concerned with significant investments in long-term assets.There are two types of capital budgeting techniques under certainty: a.5.Risk and Refinements in Capital Budgetinga.Sensitivity Analysis.Sensitivity Analysis is a methodology for analyzing changes in a project's NPV (or IRR) for a given change in one of the variables.It investigates the effect of changing any of the input variables on the NPV or IRR (e.g., the initial outlay, selling prices, sales volume, project life span, and so on).

Table 6 :
Beta of Bank Sumsel Babel

. Cost of Equity Bank Sumsel Babel.
The next step is to determine the cost of equity after obtaining Bank Sumsel Babel's number of leveraged beta Risk-Free by using the B.I. 7-day reverse repo interest rate as the reference and determining the Indonesia Equity Risk Premium is 6,12%.

Table 7 :
Cost of Equity The first step in calculating the cost of debt of Bank Sumsel Babel is to examine the Bank's long-term debt.

Table 8 :
Cost of Long-Term Debt Bank Sumsel Babel

(Weight Average Cost of Capital) Bank Sumsel Babel.
The author continues the process by calculating the Average Weight Cost of Capital Bank Sumsel Babel for investing in the project after obtaining all the costs of equity and debt.

Value after termination - proceeds from sale of asset termination - Capital Gain - 4,045,000,000 Gain - Tax 25% - 3) Operating Cashflow.
). f. Assumption Number of Branches + Sub-branches.According to Bank Sumsel Babel's financial statements, branch profits for each type of credit are as follows:

Table 10 :
Projections of Bank Sumsel Babel Credit and Financing Revenue

Cash inflows 24,888,397,696 Payback Period (year) 1 Year + 1 Month Discounted Payback Period (year) 1 Year + 2 Month payback period is greater than the
maximum acceptable payback period, reject the project discounted payback period is greater than the maximum acceptable payback period,

reject the project Step 2: Determine Calculation of the Accounting Rate of Return (ARR) Average Profit 6,222,099,424 Accounting Rate of Return 117% Accounting Rate of Return is greater than the
required rate of return,

acceptthe project Step 3: Determine Calculation of the Net Present Value & Probability Index Net Present Value 23,907,209,112 Probability Index 4.50 NPV is greater than $0, accept the project PI is greater than 1, accept the project Step 4: Determine Calculation of the Internal Rate Return & MIRR Internal Rate Return 98% Modified Internal Rate Return 61% IRR is greater than the cost of capital, accept the project MIRR is greater than the cost of capital, accept the project
Based on the capital budgeting analysis, all