state of indonesia's financial access and payments 2015
TRANSCRIPT
![Page 1: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/1.jpg)
STATE OF FINANCIAL ACCESS AND PAYMENTS IN INDONESIA 2015 - part 1
![Page 2: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/2.jpg)
71 ATMs per 100,000 people in Jakarta
213 bank offices per 100,000 people in
Jakarta
![Page 3: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/3.jpg)
17 ATMs per 100,000 people in Central
Kalimantan
27 bank offices per 100,000 people in Central Kalimantan
![Page 4: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/4.jpg)
15 ATMs per 100,000 people in East Nusa
Tanggara
16 bank offices per 100,000 people in East Nusa Tanggara
![Page 5: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/5.jpg)
Number of adults with accounts in formal financial
institutions
20 in 100 adults - Indonesia26.5 in 100 adults - Philippines
35.2 in 100 adults - India63.8 in 100 adults - China
![Page 6: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/6.jpg)
![Page 7: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/7.jpg)
State of household savings in Indonesia
68 out of 100 households have savings
48 out of 100 household have savings with formal
financial institutions
![Page 8: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/8.jpg)
State of household borrowing
60% households may make borrowings
One serious concern is only 17% financing comes from
banks, while 36% comes from non-formal financial institutions
![Page 9: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/9.jpg)
State of Credit Segment for Micro- and Small Medium Enterprises in Indonesia
More than 90% businesses in Indonesia are MSMEs.
Low MSME credit access is reflected on low MSME credit segment, which is less than 20%.
Through more in-depth observation, credit segment for micro sector turns out to be
lower, less than 19%.
![Page 10: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/10.jpg)
State of Credit Segment for Micro- and Small Medium Enterprises in
Indonesia
The interest rate of MSME credit is considered high, above 15%.
It then creates more constraints for MSMEs to obtain financial
support
![Page 12: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/12.jpg)
Why is there limited financial access?
![Page 13: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/13.jpg)
Limited financial access also correlates to the increasing
gap level.
High economic growth (as indicated by increasing GDP/capita) should be followed
by gini ratio decrease.
![Page 14: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/14.jpg)
However, the fact is reversed, where the
correlation of gini ratio and GDP/capita is parallel.
What confirms this?
![Page 15: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/15.jpg)
This is confirmed by the decreasing number of low
income people against GDP growth, where such number has been decreasing since 2009 amidst more steady
economic growth above 6%.
![Page 16: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/16.jpg)
Limited financial access cannot transmit
economic growth to unbanked people,
which further prevents poverty alleviation.
![Page 17: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/17.jpg)
STATE OF INDONESIA’S CASHLESS
TRANSACTIONS
![Page 18: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/18.jpg)
Indonesia still falls in the category of countries with high cash transactions (cash-based economy).
Indonesia sits in the lower group with Nigeria in terms of non-cash transactions.
![Page 19: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/19.jpg)
What is the impact of high cash transaction on the financial sector?
![Page 20: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/20.jpg)
From the financial inclusion perspective,
cash transactions make economic actors unable to have any incentive to
enter the financial sector.
![Page 21: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/21.jpg)
This is also supported by consumptive behaviour and limited income for savings.
Consequently, economic actors have never been
recorded as the customers of financial institutions.
![Page 22: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/22.jpg)
Why are financial records important?
![Page 23: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/23.jpg)
STATE OF FINANCIAL ACCESS AND PAYMENTS
IN INDONESIA - part 1
![Page 24: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/24.jpg)
Meanwhile, financial record is one of the important prerequisites for credit extension, which may
boost economic activities.
![Page 25: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/25.jpg)
Why is the level of unbanked in Indonesia
high?
![Page 26: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/26.jpg)
Supply side
Factors inhibiting services to the community: costly branch establishment
• complex establishment process, • high degree of formality, • bank’s perception of unprofitable grassroots
customers, and • unsupportive IT such as limited and inefficient
communication network.
Those factors result in bank’s decisions to prefer to enter mature areas, such as Java Island and big
cities outside Java.
![Page 27: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/27.jpg)
Demand side
• insufficient money for savings, • expensive fees, • far distance from houses to bank
offices, • lack of understanding on saving
money with banks, • no documents as required like
resident's identity cards, • distrust in banking system, or
religious reasons
![Page 28: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/28.jpg)
What are the 2 big models in financial
access expansion?
![Page 29: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/29.jpg)
Telco-based model
Telco companies issue electronic money and save assets in an equal
value thereto in combined accounts with the bank.
![Page 30: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/30.jpg)
Bank-based model (3 schemes)
First, banks provide individual accounts which can be used through branchless channels they manage, such as CAIXA in Brazil, bKash in Bangladesh, and Telenor in Pakistan.
Second, banks provide individual accounts accessible by agents and managed by non-banks and/or through the technology, like SMART (21 banks in the Philippines).
Third, banks issue electronic money for direct sale and distribution by non-banks to customers.
![Page 31: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/31.jpg)
Telco- based model will be preferable if speed, wide coverage, mass market grasp, and many agents are the priority.
However, this model has some weaknesses due to the absence of deposit insurance by LPS, no interest for the e-money, and low credit extension potential.
![Page 32: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/32.jpg)
If convenience becomes the priority (existence of consumer protection, regulation by the authority, deposit insurance by LPS, and interest), bank-based model is the option.
However, this model also has some weaknesses in terms of speed, limited access, and high cost.
![Page 33: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/33.jpg)
Mobile Money or Electronic Money has quite expansive development in the international world.
The rapid growth of telecommunication sector is considered to support electronic money development. In the implementation of this model, focus on unbanked people is given to almost all developing and poor countries.
![Page 34: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/34.jpg)
Until 2013, there are 219 implementations of mobile money in
84 countries.
![Page 35: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/35.jpg)
In Part 2…
We’ll discuss…
• Bank Indonesia’s strategies for promoting financial inclusion
• How Electronic Money and Digital Financial Services synergy can help expand financial inclusion
• A financial inclusion development model we can use
![Page 36: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/36.jpg)
Source: Public Lecture on the Central Bank -
Bank Indonesia’s Policies on Financial
Inclusion through Non-Cash National
Movement
![Page 37: State of Indonesia's Financial Access and Payments 2015](https://reader030.vdocuments.us/reader030/viewer/2022032503/55bff718bb61eb1e4c8b465a/html5/thumbnails/37.jpg)
More insights
at…