Digital Revolution Paradigm in
Islamic Economy and Finance
Dr. Iwan PontjowinotoJakarta, November 2019
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 1
Financial Literacy & Inclusivity
51% Adult without bank account:42% due to insufficient fund32% expensive 25% lack of document
Low financial literacy, despite:Internet penetration 64% of pop. Mobile internet 36% of pop.Smart phone users 26% of pop.
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 2
Internet Market & Productive Population
Productive Population
Internet Economy Market Size (GMV, $B)
Age
Millennials
CAGR28%
209million
233million
103million
Indonesia is the largest Muslim country in the world with high growth in middle class
Muslimpopulation 2010
Muslim population 2020 (projected)
MAC Muslim 2020 (projected)
The Hijra-bound MillenialsTransformed : more religiousSeeking religious role models24% of Middle Class Muslim
New Gen-X MuslimSeek halal lifestyleInterdependent future27% of Middle Class Muslim
Husnul Khotimah SeniorsSeeking active & halal lifeOptimizing their assets & skills8% of Middle Class Muslim
Source: World Bank, BCG and BPS
Middle Class Muslim Market
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 3
Millennials
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 4
Activities Millennials like the most:• Spend time with family• Sport and outdoors activities• Culinary• Travelling• Hang out with friends
Priority in life;• Making parents happy• Owning a house• Becoming good parents• Becoming successful entrepreneur• Become rich
Source: IDN Research Institute – Indonesia Millennials Report, 2019
Millennials and Finance
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 5
Financial Condition:51.1% of the income is drained for monthly expenses.10.7% of their income for savings.6.8% of the income for insurance 5.3% for installments and investment, and 5.3% for donation.
Financial products
• 80.2% have bank products.
• 19.3% have health insurance (BPJS).• 17.2% have leasing/mortgage.• 4.2% have insurance.
Source: IDN Research Institute – Indonesia Millennials Report, 2019
Millenials Financial Behavior
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 6
Source: IDN Research Institute – Indonesia Millennials Report, 2019
• Activity are digital based.Starting from culinary and traveling destination, reference to purchase of goods and services are done online Millennials ready for digital era.
• Productive - not afraid to start their own business.Main priorities : 1) Opportunity for self development, 2) feeling comfortable in doing their work, 3) seek to develop creativity further, and 4) have multitasking ability when working Capital for strengthening Indonesia’s economic independence in the future, including creative economy industry.
• Have cross border network.They are a connected to each other, and through social media: 1) their access to information and friends are going wider, 2) they can voice their opinion through social media, and 3) develop social empathy and solidarity Strong foundation to develop socially responsible businesses.
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 7
Source: IDN Research Institute – Indonesia Millennials Report, 2019
Digital Revolution & Millenials
Middle Class Muslim Trends
Hijra : Transformed
Passion for Learning
Culinary & Fashion
Self Sufficiency
Contributions
Adopt Islamic Values (Maqashid of Sharia) Building new communities The New Modern
Quest for better understanding of Islam Delivered in contemporary styleWays to be connected in a community
Halal food in fusion fashion Trendy muslim fashion and cosmeticsWants to travel in halal fashion
More entrepreneurialsBuilding halal businesses Islamic financing & investment
Islam is rahmatan lil alaminCare for a better world clean lifestyleCrowd funding campaign for philanthropy
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 8
• Finding Qiblat, Mosque, • Schedule for Shalat, Fasting, other ibadah• Al Qur’an, Prayers, Murottals
• Credible and interesting articles• Talkshows, learning groups, podcast• Focus group chats, with/without Ustadz
Info and location of halal certified food, restaurants, hotels, medical services and other halal services (incl. travel & umrah)
• Islamic financing, protection, investments • Consultancy in halal business• Solution for personal financing problems
• Info on social & charity projects• Join social activity communities• Crowd-funding for zakat & waqaf
Digital Revolution in Islamic Economy
Hijra : Transformed
Passion for Learning
Culinary & Fashion
Self Sufficiency
Contributions
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 9
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 10
Digital Solution in Islamic Economy
Chat
Payment
Transact
Info
Posting
Deliver
Food
FashionCosmetic
s
Pharmacy
Agriculture
Fishery
Farm
e-Comm
Marketplace
Forwarding
Travel &Tourism
Transport
BusinessServices
HomeServices Educ
ServicesHealth
Services
Da’wahWaqaf
Zakah
SocialSecurity
DefaultSolution
Insurance
FinancialInvestment
PaymentGateway
e-Wallet
CrowdFunding
TradeFinance
P2P
AssetFinance
Mortgage
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 11
E-Wallet : Local Payment Apps
Source: MomentumWorks – Indonesia Fintech Report, 2019
2018 Wakaf 2014 - 2018
Donations : IDR 237.83 Billion
Campaign : 11,650 Projects
Crowd : 531,353 Persons
Purpose• Medical/Health : 25%• Religious : 22%• Humanity : 17%
Donations : IDR 84.5 Billion
Beneficiaries : 9.223.281 Persons
Statistics on Donation• Average Donation IDR 230.000• Biggest Project IDR 4.2 Billion• Majority Project < IDR 25 Mill.
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Crowd : 10.432 Parties
Purpose• Medical/Health : 56%• Social : 31%• Education : 9%
Statistics on Donation• 49% IDR 100.000 – 1.000.000• Biggest Project IDR 10.2 Billion• Majority Project < IDR 750 Mill.
Market for Innovative Financial Technology will continue to Grow
• Industry will continue to grow until the financial services gap is met
• Market has adapted to plastic money will welcome internet-money
Challenges in Financial Literacy and Inclusiveness• Information through social media has been widely accepted• More interactive internet-based learning facility will thrive
Abuse in Digital Economy need to be addressed • Data privacy and security will have to be improved• Credibility and innovative information to fight hoax
High potential for Islamic Financing and Philanthropic Crowd-funding• Should have muslim-friendly vision, value and ecosystem • Huge untapped potential in zakat & waqaf
Collaboration, not cut-throat competition• Complementary collaboration between existing and new startups• Imported business model should be well adapted to local behaviour.
Digital Revolution in Islamic Finance
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 13
Market for Innovative Financial Technology will continue to Grow • Industry will continue to grow until the financial services gap is met• Market has adapted to plastic money will welcome internet-money
Challenges in Financial Literacy and Inclusiveness
• Information through social media has been widely accepted
• More interactive internet-based learning facility will thrive
Abuse in Digital Economy need to be addressed • Data privacy and security will have to be improved• Credibility and innovative information to fight hoax
High potential for Islamic Financing and Philanthropic Crowd-funding• Should have muslim-friendly vision, value and ecosystem • Huge untapped potential in zakat & waqaf
Collaboration, not cut-throat competition• Complementary collaboration between existing and new startups• Imported business model should be well adapted to local behaviour.
Digital Revolution in Islamic Finance
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 14
Market for Innovative Financial Technology will continue to Grow • Industry will continue to grow until the financial services gap is met• Market has adapted to plastic money will welcome internet-money
Challenges in Financial Literacy and Inclusiveness• Information through social media has been widely accepted• More interactive internet-based learning facility will thrive
Abuse in Digital Economy need to be addressed
• Data privacy and security will have to be improved
• Credibility and innovative information to fight hoax
High potential for Islamic Financing and Philanthropic Crowd-funding• Should have muslim-friendly vision, value and ecosystem • Huge untapped potential in zakat & waqaf
Collaboration, not cut-throat competition• Complementary collaboration between existing and new startups• Imported business model should be well adapted to local behaviour.
Digital Revolution in Islamic Finance
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 15
Market for Innovative Financial Technology will continue to Grow • Industry will continue to grow until the financial services gap is met• Market has adapted to plastic money will welcome internet-money
Challenges in Financial Literacy and Inclusiveness• Information through social media has been widely accepted• More interactive internet-based learning facility will thrive
Abuse in Digital Economy need to be addressed • Data privacy and security will have to be improved• Credibility and innovative information to fight hoax
High potential for Islamic Financing and Philanthropic Crowd-funding
• Should have muslim-friendly vision, value and ecosystem
• Huge untapped potential in zakat & waqaf
Collaboration, not cut-throat competition• Complementary collaboration between existing and new startups• Imported business model should be well adapted to local behaviour.
Digital Revolution in Islamic Finance
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 16
Market for Innovative Financial Technology will continue to Grow • Industry will continue to grow until the financial services gap is met• Market has adapted to plastic money will welcome internet-money
Challenges in Financial Literacy and Inclusiveness• Information through social media has been widely accepted• More interactive internet-based learning facility will thrive
Abuse in Digital Economy need to be addressed • Data privacy and security will have to be improved• Credibility and innovative information to fight hoax
High potential for Islamic Financing and Philanthropic Crowd-funding• Should have muslim-friendly vision, value and ecosystem • Huge untapped potential in zakat & waqaf
Collaboration, not cut-throat competition
• Complementary collaboration between existing and new startups
• Imported business model should be well adapted to local behavior.
Digital Revolution in Islamic Finance
Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 17
Terima kasih