Ibu Ani is a warung owner in Tegal, Central Java. She works 12-14 hour days, seven days a week at her small store selling cell phone top-up cards and other sundry items. Of the store’s daily IDR 300,000 (about $300 USD) sales, she sets aside IDR 20,000 (about $2 USD) as savings.
Now e-MITRA, funded by USAID’s Global Broadband and Innovations (GBI) Alliance, is working to provide Ibu Ani, and small business owners just like her, access to digital financial services. Together with Bank Mandiri, the e-MITRA team recently conducted a field survey on how mobile technology can be used to address the financial needs of the unbanked segment.
There are millions of Indonesians like Ibu Ani. They have the ability to save about $50 USD a month but due to no access these savings are not being deposited in the formal banking institution on a regular basis.
Digital banking has huge potential to revolutionize access to financial services in the country. While the World Bank’s International Finance Corporation estimates that only 50-60 million Indonesians currently have a bank account, between 96 and 114 million have mobile phone subscriptions. e-MITRA aims to help grow the active subscription base of mobile money accounts to 20% of mobile phone users by September 2016.
Technology and innovation can play a major role in providing easy and cost-effective access to this unbanked or underbanked segment. One such technology is the use of mobile money or electronic money on mobile phones. Mobile phones can now perform the functions of an ATM while the actual cash-out function can be performed by a number of mobile money agents provided by the mobile network operators (MNOs). These qualified agents are able to perform basic banking services and offer the convenience and efficiency to penetrate the unbanked segment.
Banks can also play a major role in providing other financial services such as micro-savings, micro-credit and even micro-insurance to these countless of millions of micro-entrepreneurs. Through mobile technology and an innovative agent banking solution, e-MITRA and USAID are helping to provide important banking products and services to the millions of unbanked Indonesians.
Additionally, the Global Broadband and Innovations (GBI) Alliance is a partnership with USAID to apply ICT solutions across both NetHope and the agency’s development portfolio.
This blog was originally published in the April 2014 USAID Indonesia Science & Technology Newsletter; click here to read it in its original form.