Driving Financial Inclusion Through Technology

Digital transformation of the bank opens up access to financial services for many people, including the population who previously had no access to financial services due to their income level or location. Financial inclusion is an effort to make access to financial products and services accessible and affordable to all individuals and businesses, regardless of their income level or location, to remove barriers that prevent them from using financial products and services (Grant, 2024). A survey conducted by the Indonesia Financial Services Authority regarding financial inclusion in 2022 shows that 85.10% of participants had access to financial products and services, which is an increase from 79.19% in 2019 (OJK, 2022).

Financial inclusion provides a lot of benefits to all parties involved in financial activities. For customers, access to financial services makes it easier to open accounts, carry out transactions, and get financial loans and ultimately makes it possible for them to accumulate and grow their wealth. For banks, increasing financial inclusion indicates that there is potential for further business and revenue growth opportunities, thus making it attractive for banks both through distributing credits to the public and through fee-based income. Increased financial inclusion can lead to overall economic growth from the resulting increase in economic activity and can lead to reduced wealth inequality. The main key to doing that is facilitating access to individuals and businesses to financial products and services more broadly and more affordable.

With smartphone penetration projected to exceed 90% (Statista, 2024) and the number of internet users to exceed 240 million (Statista, 2023) in the next few years, Indonesian people are primed to adopt financial products and services that are accessible via smartphone using the internet, namely mobile banking and internet banking. This sentiment is in line with what the banks in Indonesia are doing, which are intensively updating their mobile banking and internet banking offerings to attract a more digitally savvy user base with improvements in user interface (UI) and better usability.

Most recently, in July 2024, Bank Negara Indonesia (BNI) launched their newest mobile banking app called “wondr by BNI”. This app is intended as an improvement from previous mobile banking apps by offering features that adopt 3 financial dimensions (Transactions, Insight, and Growth), has attractive UI and graphics, and is accompanied by various promos in collaboration with merchants to attract younger and trendier customer previously who are not catered to by BNI (Aprilia, 2024). This improvement also makes it easier for customers to open an account, make payments and transactions, monitor their expenses, and open up deposits so that they can accumulate some interest. With these improvements, it is not surprising that 11 days after launch, the app has been downloaded more than 850,000 times, some of which may be a new customer who opened a new account in BNI using the apps (Uly et al, 2024).

Even though the adoption of smartphones and the internet is projected to increase, there are still many levels of society that are still behind, especially people with low economic levels who live in rural areas that are not reached by bank branches or ATMs. Bank Rakyat Indonesia (BRI), one of the state banks that focuses on micro-scale financial services, is trying to overcome this through their initiatives called BRILink.

BRILink is a service where BRI provides access to their financial products and services to agents located in rural areas who open a small business and want to partner with BRI so they can provide access to financial services for their community and receive some additional income. Agents are given an Electronic Data Capture (EDC) machine provided by BRI that is connected to their network. Using this machine, agents can choose services such as bank transfers, e-wallet top-ups, and utility payments for electricity, PDAM, BPJS, etc (Bank Rakyat Indonesia, 2024). This approach can provide BRI customers in rural areas access to carry out their financial activities through their nearest BRILink agent without needing to visit an ATM or local branch.

Even though the BRILink location looks small, the implementation of BRILink has quite a big impact. In 2023, there are 740,500 BRILink agents spread across 75,000 villages throughout Indonesia with a transaction value of Rp. 1,426.6 trillion from 1.08 billion transactions. The number of transactions on BRILink can even compete with the transactions on BRImo mobile banking in 2022 which reached 1.82 billion times. With the fee-sharing model adopted by BRILink, agents also receive some profit which is estimated to reach 2 to 3 times BRI's share of the profits (Hema & Rahmawati, 2024). In this case, BRILink can expand the reach of financial services from BRI and also become an attractive business opportunity for agents so that they are mutually beneficial to each other.

Increasing financial inclusion is not just the responsibility of the banks, the Indonesian central bank or Bank Indonesia (BI) also has a role in making this happen. Apart from issuing monetary policies and regulations regarding financial inclusion, BI also succeeded in providing 2 new solutions to facilitate financial transactions, one of which is QRIS. Quick Response Code Indonesian Standard (QRIS) usually abbreviated as QRIS (pronounced KRIS) is a technology that enables QR Codes to be used as a method of transactions (Bank Indonesia, 2020). Currently, QRIS is one of the most used transaction methods and has had a big impact on increasing the adoption of a cashless transaction which minimizes the need for physical cash. The latest numbers from BI showed that QRIS transactions in 2024 increased by 194,06% year-on-year, with the number of users reaching 48,90 million and 31,86 million merchants (CNN Indonesia, 2023).

QRIS not only makes the transaction and payment process easier but also encourages micro, small, and medium-sized businesses (UMKM) to take advantage of digital financial services, encouraging them to digitize their financial management. It doesn't just stop there, BI continues to expand the reach of QRIS through the QRIS Cross Border initiative so that QRIS is not only used in Indonesia but also abroad by collaborating with central banks in countries such as Thailand, Malaysia, and Singapore (QRIS Online, 2024).

With several examples of solutions being offered to increase financial inclusion in Indonesia, it is projected that our level of financial inclusion will continue to increase in the future. Technology is continuously making it easier, closer, and more affordable to adopt financial products and services through digital devices with the help of the internet. Apart from that, the potential for developing digital products that can be carriedout quickly can also give rise to other innovations that can bring financial inclusion in Indonesia to a further increase and make banking more accessible for customers.

References

• Aprilia, Z. (2024, July 14). Ini Alasan BNI Buat Superapp Baru, wondr!. Accessed 21 July 2024, from CNBC Indonesia

• Bank Indonesia. (2020). Kanal dan Layanan: QRIS. Accessed 21 July 2024, from Bank Indonesia

• Bank Rakyat Indonesia. (2024). Tentang BRILink. Accessed 21 July 2024, from Tentang BRILink

• CNN Indonesia. (2023, June 22). BI Klaim Adopsi QRIS Capai 35,80 Juta per Mei 2023. Accessed 21 July 2024, from CNN Indonesia

• Grant, M. (2024, March 12). Financial Inclusion: Definition, Examples, and Why It's Important. Accessed 22 July 2024, from Investopedia

• Hema, Y., Rahmawati, W. T. (2024, 30 March). Jumlah Agen BRIlink Kian Tambun, Nilai Transaksinya Tembus Rp 1.426,6 triliun di 2023. Accessed 21 July 2024, from Kontan

• OJK. (2022, November 22). Siaran Pers: Survei Nasional Literasi dan Inklusi Keuangan Tahun 2022. Accessed 20 July 2024, from OJK

• QRIS Online. (2024). QRIS Cross Border. Accessed 21 July 2024, from QRIS Online

• Statista. (2024, January 30). Smartphone penetration rate in Indonesia from 2020 to 2024 with forecasts until 2029. Accessed 21 July 2024, from Statista

• Statista. (2023, December 12). Number of internet users in Indonesia from 2017 to 2022 with forecasts until 2028. Accessed 21 July 2024, from Statista

• Uly, Y. A., Ika, A. (2024, July 19). 11 Hari Diluncurkan, Wondr Sudah Diunduh Lebih dari 850.000 Kali. Accessed 21 July 2024, from Kompas