Financial Inclusion: Reaching the Undeserved
IriantoSenior Executive Vice President
Change Management BRI
FINANCIAL INCLUSION PREVIEW
BANKING ROLE
CHALLENGE
2
FINANCIAL INCLUSION PREVIEW
3
FINANCIAL INCLUSION DEFINITION
Financial inclusion provides access to financial services for undeserved people
“financial inclusion involves providing accessto an adequate range of safe, convenientand affordable financial services todisadvantaged and other vulnerable groups,including low income, rural andundocumented persons, who have beenunderserved or excluded from the formalfinancial sector” (Financial Action TaskForce/FATF).
“state in which all working age adults haveeffective access to credit, savings, payments,and insurance from formal service providers.Effective access involves convenient andresponsible service delivery, at a costaffordable to the customer and sustainablefor the provider, with the result thatfinancially excluded customers use formalfinancial services rather than existinginformal options” (The Consultative Group toAssist the Poor/CGAP).
4
UNDESERVED BARRIERS
COST
INFORMATION
DOCUMENTATION
CHANNEL
PRODUCT
EFFECTIVE ACCES
DISTANCE
5
India is the first target of Financial Inclusion out of 25 focus countries in the world, China and Indonesia are the second and the third
Universal Financial Access (UFA) Target in 2020
Mexico2.6%
Nigeria2.7%
Egypt2.4%
Pakistan5.2%
China11.6%
India20.6% Indonesia
5.6%
Vietnam
2.4%
Bangladesh
3.7%
Brazil2.4%
6
Indonesia is made up of thousands of large and small islands, which are connected by the strait
and sea. Indonesia has 34 Provinces, 416 Regencies, 98 Cities, 7.160 Districts, 8.430 Sub-
districts or urban Community, 74.754 Villages.
Indonesia consist of 17,504 islands, which 7,870 of them have names, while 9,634 do not have a name. (According to data from the Ministry of Interior of the
Republic Indonesia in 2010)
JAVA
SUMATERA
KALIMANTAN
SULAWESI
MALUKU
BALI AND NUSA TENGGARA
PAPUA
7
POTENTIALLY RICH BUT POPULOUS, A DOUBLE EDGE SWORD
888
374 327 308 285
Indonesia Thailand Malaysia Singapore Philipines
255.9
100.968.0
30.55.7
Indonesia Philipines Thailand Malaysia Singapore
POPULATION 1H 2015(Milion people), July 2015
REAL GDP 2014(USD Billion)
Source: Indonesian State-owned Enterprises Roadmap 2016 8
Indonesia has potential to accelerate and prosper which is supported by itsproductive population and natural resources. Indonesia is projected to become a
regional economic powerhouse
A REGIONAL ECONOMIC POWERHOUSE ?
T O D A Y
• 16th largest economy in the World
• 45 Million members of consuming
class• 53% of population in cities
producing 74% of GDP• 55 Million workers• $ 0.5 Trillion market opportunity in
consumer services, agriculture and fisheries, resources and education
2 0 3 0
• 7th largest economy in the World• 135 Million members of
consuming class• 71% of population in cities
producing 86% of GDP• 113 Million workers• $ 1.8Trillion market opportunity in
consumer services, agriculture and fisheries, resources and education
Source: McKinsey, BPS, Bloomberg, CEIC, On Roadmap BUMN 2016
9
OPORTUNITY TO GROW
Loan to GDP Ratio(%), 2014
Deposit to GDP Ratio(%), 2014
Indonesia’s banking penetration is lower compared to other ASEAN-5, giving opportunity for banking industry to grow
Source: CEIC
10
DEMAND FOR INCLUSION AND LITERACY
11
“Access to credit is a key link between economic opportunity and economic outcome. It is essential for individual empowerment. Yet currently almost two third of the population in Indonesia does not have access to any banking services, and close to half have no savings accounts. Micro credit program such as those implemented by Bank Rakyat Indonesia have been successful in extending coverage to remote areas.”
Christine LagardeManaging Director IMF
Indonesian Poised for Indonesia’s Economic Potential
Speech at University of Indonesia, Jakarta September 1st, 2015
• Two billion people -- or 38% of adults in the world -- do not use formal financial services, and 73% poor people are unbanked because of costs, travel distances and the often-burdensome requirements involved in opening a financial account. Their ranks include more than half of adults in the poorest 40% of households in developing countries.
• Research shows that access to savings products – and, in particular, to “commitment” savings, in which individuals restrict their right to withdraw funds until they have reached a self-specified goal – can have important benefits beyond simply increasing one’s amount of savings: It can also help empower women, increase productive investment and consumption, raise productivity and incomes, and increase expenditures on preventive health.
• A transaction or deposit account can be the stepping stone to full financial inclusion, providing a pathway to a broader range of responsible financial services provided through stronger and more diverse financial institutions. Emerging evidence indicates that access to financial services through formal accounts can enable individuals and firms to smooth consumption, manage risk, and invest in education, health and enterprises.
WORLD BANKOverview Financial Inclusion
Source: http://www.worldbank.org/en/topic/financialinclusion/overview#1
WHY FINANCIAL INCLUSION?
12
CHALLENGE
13
UNBANKED People
Global Findex shows in 3/4 poorestcountries don’t have bank account not onlybecause they are poor but also cost,distance and document
People around the world (except advanced countries) prefer to take loan from friends or
family related
55% Borrower in the
developing countriesprefer informal financialservices
Source : World Bank, 2014
DISTANCE
The archipelago country which has more than 17,000 islands
MAJOR CHALLENGES
COST
Spreading delivery chan-nels and labor intensive mean high overhead cost
DOCUMENTATIONINFORMATION
PRODUCTCHANNEL
Lack of information about financial services
Wider delivery channel to serve more people
Simplicity product & service
Conventional banking services need adminis-tration (documentation)
14
UNBANKED DEMOGRAPHY
15
BANKING ROLE
16
Providing channel to deliver financial services
Communicating financial service product knowledge
Benefiting social environment. By encouraging others to prosper, thebank actually is working to sustain and even increase its performance
Accessibility
Financial Literacy
Social Impact
17
Conventional Channel
Electronic Channel
Mobile Banking / Internet Banking
Agent Banking
Physical branch (brick & mortar)
ATM/CDM, EDC, MPOS, etc.
Mobile & Internet Banking
Branchless banking (third party)
ACCESSIBILITY
18
• Technology has become backbone for development of banking industry in the future. Improving the quality of banking technology has started by connecting all branches arround the archipelago real time online. Certainly, to support the connection, BRI has to prepare a reliable technology through developing IT infrastructure such as server, communication network, software, human resources, etc.
• In 2014, BRI has started a big movement by procuring its own satellite, called BRI-Sat, BRI will be the first and only bank that owns and operates satellite. BRI has signed MOU with Space Systems/Loral, LLC and Arianespace to build and launch the Satellite. The Satellite has been launched in Kourou Guyana in last June 2016.
ACCESSIBILITY – BRISAT FOR FINANCIAL INCLUSION
Specification:
Weight: +/- 3.500 kgNumber of transponder: 45Coverage: Indonesia, ASEAN, Asia Timur Laut, part of Pacific and West Australia
19
ACCESSIBILITY – INNOVATION FOR FINANCIAL INCLUSION
1. Balance Information
2. Transfer
3. Top up Mobile Phone Voucher
4. Payment Points
BRILink Features:
CASH
BRILink Advantages:
Real time online Fast and easy transaction Safe by using customer PIN Variety of transactions (features and facilities) Can be accessed by any other bank ATM card users who are members
of the LINK, ATM Bersama and Prima Network
1. Cash Deposit
2. Payment Loan
3. Cash Withdrawal
1. Balance Info2. Payment and Purchase3. Transfer4. Electronic Access Code
(electronic token)5. Check Agent Validity6. Registration7. Top Up
Banking Services in BRILinkAgents
Cash Deposit & Cash Withdrawal
Payment Point (electricity, phone, loan, etc)
PurchaseTop up mobile phone voucher & electricity voucher, buy goods, etc.
Transfer (to intern al bank & outside the bank)
No need bank saving account to do transaction
20
21
Number of BRILINK Agent(Agent), 2015
Number of BRILINK’s Transaction(Milion), 2015
Volume of BRILINK Transaction(USD Billion), 2015
6.77 13.17
23.60
Jun'15 Sep'15 Dec'15
32,483 35,955 50,259
Jun'15 Sep'15 Dec'15
0.75 1.48
2.60
Jun'15 Sep'15 Dec'15
ACCESSIBILITY – INNOVATION FOR FINANCIAL INCLUSION
Video, looping
• “Teras BRI Keliling” is an innovative moving branch as amicrobanking distribution channel that provides bankingservices with real time online transactions through a four-wheel vehicle (automobile).
• “Teras BRI Keliling”was invented by Bank BRI to embracefinancial inclusion by reaching out deeper community inrural and remote areasacross Indonesia. It serves broadbanking services include account oppening, savings, cashwithdrawal, e-channel dan micro lending. It operatesparticularly on community center such as traditional“wet” market and seasonal market, brings an easybanking access to the buyer and traditional seller/trader.
Kas Keliling
ACCESSIBILITY – INNOVATION FOR FINANCIAL INCLUSION
100
350465
610
693 693
2011 2012 2013 2014 2015 Q1 2016
Number of Teras BRI Keliling
22
Banking Hall
The Boat is equipped with: Banking hall
1 Unit ATM
Total passengers : 11 people (1 teller, 1 customer
service, 2 micro account officers, 2 securities,
and 5 crews).
ATM Customer Service
SERVING FISHERMEN AND COASTAL COMMUNITY
The newest BRI’s Innovation to support financial inclusion and financial literacy in costal & remote islands. Teras Kapal could reach more unbanked
people in Archipelago of Kepulauan Seribu to help the local economy to grow faster and to maintain Rupiah
Sovereignty
ACCESSIBILITY – INNOVATION FOR FINANCIAL INCLUSION
23
OPERATION AREA of BRI BOAT BANK
THE FIRST INDONESIA’S BOAT BANK
To provide financial services for broader community throughout Indonesia, particularly for the fisherman and coastal communities. BRI Boat Bank is a banking outlet that provides banking services
to coastal communities on a boat
ACCESSIBILITY – INNOVATION FOR FINANCIAL INCLUSION
Archipelago of Thousands IslandArea: ± 10,8 km2 land and ± 7000 km2 watersPopulation : ±21.554 people (BPS, 2011)Main industry: fishing & tourism
24
Bank organizes local event to educate banking product for rural people
FINANCIAL LITERACY
25
SOCIAL IMPACT
Asset Increase 20x Sales Increase 2,2x In average each debtor
creates job opportunity for
1,17 – 2 workers
Source: University of Indonesia Research
1.21
24.72
38.4
84.84
2009 2012
Asset Sales (IDR Million)
Micro Credit Impact(Rp Juta)
2.2x
20.4x
26
THANK YOU
27