At the launch of e-MITRA in 2012, the regulatory environment for digital financial services (DFS) in Indonesia was restrictive. USAID, however, saw the potential for this to change and was a vibrant participant in the evolution of the regulatory and market landscape for DFS in Indonesia over the course of the project.
Over the past three and a half years, USAID’s Global Development Lab and the USAID Indonesia Mission have provided 3.5 million in funding to help build capacity in Indonesia for private sector delivery of DFS that could reach the poor and unbanked.
Now, as e-MITRA comes to a close, the project has released a summary report, “Digital Financial Services in Indonesia.” The report provides an overview of the state of DFS in Indonesia and the impact of e-MITRA.
The report tracks the project’s three phases of work:
- Delivering insights into consumer, medium and small retailers’ financial behaviors to drive DFS product design.
- Building internal capacity of DFS providers to expand financial inclusion through DFS to poor and unbanked populations.
- Supporting the creation of a regulatory environment of licensing and certainty for DFS providers to launch and scale DFS services through bank-led, mobile network operator (MNO) or third party models.
The final section of the report takes a look ahead at what’s to come for the DFS sector as it continues to gain attention and momentum, and suggests several opportunities for providers and regulators that could accelerate the scale and spread of DFS throughout Indonesia.
One of the key contributing factors to the current development of Indonesia’s DFS landscape is cooperation amongst participants from diverse sectors, including MNOs, financial institutions and payment platform providers. These relationships continue to evolve with banks and MNOs working in collaboration to expand the reach of DFS, as the Government of Indonesia simultaneously plays a key role in backing the push for a cash-lite economy.
It is on this note of cross-sector collaboration and optimism that the e-MITRA project comes to a close and Indonesia continues on an accelerating path to financial inclusion.