Indonesian fintech companies are still facing basic infrastructure and literacy issues in their attempt to increase financial inclusion in the country.
Some two-thirds of surveyed fintech companies were already serving both the unbanked and underbanked population, including in rural areas, according to a recent survey by the Indonesia Fintech Association (Aftech), which has 362 members offering various financial services.
However, 75 percent of the fintech companies reported they were still facing low financial literacy among the target market, 57 percent reported facing basic infrastructure problems and 44 percent reported facing limited capital or resources challenges.
“So if we can work on this part, all of these three things, we can actually reach our target even faster,” Aftech board member Chrisma Albandjar said on Thursday during the Jakpost Fintech Fest webinar series organized by The Jakarta Post.
“If we are very focused on that part we will actually achieve the 90 percent financial inclusion,” she added, referring to the national target in 2024.
According to a 2019 survey by the Financial Services Authority (OJK), Indonesia’s financial inclusion rate stood at 76.1 percent, marking an increase of some 40 million unbanked adults from 2017, when the rate was nearly 50 percent.
To overcome the challenges, 45 percent of fintech companies told the Aftech survey they collaborated with traditional financial institutions such as banks and 23 percent took part in the government’s strategic partnership.
Chrisma was expecting the COVID-19 pandemic to accelerate the progress because it was leading to faster adoption of digital financial services as people had to stay at home or at least comply with social distancing rules.
The government also has interest in more and more people having a formal financial account so it can transfer its Rp 695 trillion (US$46.4 billion) coronavirus relief package efficiently, said Chaikal Nuryakin,