Mr. Budiono said Des Moines, Iowa-based Principal Global Investors LLC is the first money manager to sign on with BPKH to make the investment needed to reach out to that retail customer base across the sprawling Indonesian archipelago.
Working as the engine provider for BPKH on the strength of the digital initiative Principal designed for the project “is a great opportunity,” capable of positioning the money manager longer term to help retail customers meet a growing range of needs, Mr. Budiono said.
It fits with Principal’s goal of achieving a greater balance between the institutional segment of the firm’s Indonesian business — currently 70% of its 8.5 trillion rupiah ($573 million) in assets under management — and the remaining 30% it has raised through bank and insurance company retail platforms.
“Young Hajj will be our first direct-to-customer retail product,” Mr. Tan said.
While the challenges — and expenses — of building a retail business in a country like Indonesia are daunting, its large population, much of which is “underbanked,” and vast territory offer a backdrop where digital solutions can “leapfrog” those obstacles, said Thomas Cheong, Hong Kong-based president of Principal Financial Group’s business in Asia.
The success of local companies such as ride-hailing business Gojek — as Jakarta-based PT Aplikasi Karya Anak Bangsa is known — has effectively catalyzed the local market, paving the way for digital distribution to serve as the cornerstone of Principal Global Investors’ Indonesian retail business, Mr. Cheong said.
PGI is tailoring its Young Hajj savings program to extend for “five to 10 years, depending on the customer’s savings appetite,” Mr. Tan said.
The mobile app allows users to set their desired time period, between five and 10 years, for achieving the 25 million rupiah target, with an investment calculator setting the monthly contribution required to