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BRANCH BANKING | Cesar Tordesillas, Indonesia
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Indonesia to introduce ‘Branchless Banking’

Bank Indonesia wants banks to improve access to banking by introducing the so-called branchless banking.


Better access to the banking system would alleviate poverty, accelerate economic growth and reduce income gap, according to Bank Indonesia governor Darmin Nasution.

It is estimated that only 20 percent of Indonesian adults — defined as age 15 or above — had saving accounts in any formal financial institutions, while only 9 percent went to banks or other financial firms to get loans, according to In the World Bank’s Global Financial Inclusion Study 2012.

Indoensia has around 170 million people age 15 or older, or about 70 percent of the country's population, based on 2010 government data.

The World Bank study showed that most Indonesians relied on extended family for loans. For saving, they turn to community-based fund pooling, known as arisan , which generally operates by pooling the weekly deposits of members and disbursing the entire amount to a different member each week.


“In today’s economic situation, growth will be determined largely on how to bring the next half of Indonesians into banking. It’s a matter of survival,” Darmin said.

“The central bank will soon issue a new regulation, so that the development of branchless banking is in line with prudential consideration,” Darmin said. He did not elaborate.

Indonesia wants to emulate the success of Kenya, which launched a mobile money service in 2007. Within less than a year, a million Kenyans signed up for the service. Its penetration soared from 25 percent in 2007 to 75 percent of the 37 million population in 2010. Kenyans have used mobile money to buy groceries, withdraw cash from ATMs and start building savings.

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