Chairman of Financial Services Authority Muliaman Hadad, left, observes a branchless banking agent carrying out banking transaction on her phone in Deli Serdang, North Sumatra, last month. (Antara Photo/Septianda Perdana)

Indonesians Not Accustomed to Banking: Survey

APRIL 10, 2015

Jakarta. Indonesia’s branchless banking initiatives faces an uphill battle against misconceptions of financial services in the country, a survey report from consultancy firm InterMedia Indonesia revealed.

Nearly half of Indonesians do not use any form of financial services, according to the firm’s Financial Inclusion Insights report.

It also found that one-third of people who use informal financial services — such as arisan, a monthly social gathering which pools funds for a private lottery — cited “an inability to afford an account” as the main reason behind their reluctance to use formal banking services.

“Low-cost formal financial accounts exist in Indonesia, but most prefer informal financial services, believing formal accounts to be cost-prohibitive,” InterMedia said in the report, which was supported by the Bill and Melinda Gates Foundation.

The report surveyed 6,000 people across 24 provinces in Indonesia between August and November last year, a sampling pool which represents 94 percent of Indonesia’s 250 million population, the consulting firm claimed.

This raises concerns, according to the report, as those who do not use formal financial services tend to be more “financially vulnerable than their counterparts,” and become even more vulnerable in the face of emergencies as they rarely have savings to cover unexpected expenses.

The Financial Services Authority (OJK), the country’s financial regulator, launched a branchless banking service program last month in an effort to bring more people into the country’s financial market.

Under the initiative, lenders will be able to use individual agents with mobile devices, who will provide banking services — from savings to micro loans — to people who have limited or no access to traditional, brick-and-mortar services.

Muliaman Hadad, chairman of the OJK, stressed the service would not have a minimum requirement for deposits nor would it include administration, monthly or deposit fees.

Some of the banks who have launched branchless banking programs since OJK’s initiative launch include Bank Rakyat Indonesia, Bank Mandiri and Bank Tabungan Pensiunan Nasional (BTPN) — all of which are state-controlled lenders.

“Based on the feedback from our agents so far, the reception has been good,” said BRI corporate secretary Budi Satria.

The success of the program has led do BRI increasing its target of agency recruitment for the year.