Payroll drives rural Indonesia banking uptake as digital banks fail to sway users

Digital banks are known but users said there is no difference in app experience.

Rural factory workers in East Java, Indonesia noted payroll as the strongest motivation for owning a bank account, whilst showing strong awareness for digital banks and cashless payments, noted CGS International (CGSI).

Most of CGSI’s 89 respondents cited in the study said that they have a bank account due to it being a work requirement rather than a choice.

This suggests that payroll is a key entry point for banks to attract deposit market share, CGSI noted.

Digital banks such as Bank Jago and SeaBank were frequently mentioned to CGSI in their interviews due to a mixture of heavy advertising, promotion by key opinion leaders (KOLs), and their popular digital ecosystems.

But knowledge does not drive actual usage, CGSI said.

“Many respondents felt that digital banks (at this stage) still do not offer a meaningfully different experience compared to conventional banks’ mobile banking apps,” CGSI found.

“An interesting finding is that more than one-third of respondents reported owning multiple bank accounts, which help them better manage their money by using different bank accounts for different savings needs,” CGSI noted.

This behaviour contrasts with CGSI’s survey of urban Gen Z respondents, where multiple account ownership was less common due to admin fees.

Cashless, loans popular
There is high adoption of cashless payments amongst respondents from tier 2 and tier 3 Indonesian cities visited by CGSI.

Bank transfers, QRIS, and cash withdrawals were the most commonly used bank transfers, with respondents noting that QRIS “can now be used almost everywhere” including mom and pop stores.

About half of the respondents have loans from financial institutions.

“We also observed a growing use of pay later products, supported by an increasing online shopping trend. In addition, promotion-driven behaviour appears to be the key factor behind the rising use of pay later options, even in rural areas,” CGSI wrote.