Indonesia Boosting Financial Literacy to Reduce Unbanked Population
According to a study, Indonesia is battling with low financial literacy, which leads to a significant portion of its population being unbanked or not financially included.
A survey conducted by the Financial Services Authority in 2019 revealed that the financial inclusion rate in Indonesia was only 76.1 percent. This, however, increased from 50 percent back in 2017.
Meanwhile, the majority or 75 percent of the financial technology or fintech companies said that low financial literacy was among the primary concerns in their target markets, according to the Indonesia Fintech Association. Also, some fintech players cited fundamental infrastructure problems and limited financing.
With this problem at hand, experts say that boosting financial literacy is essential to improve financial inclusion in Singapore. This was given stress when everyone is shifting to the digital world because of the coronavirus pandemic.
Surveying the Unbanked Indonesian Population
In an interview with The Jakarta Post, Institute for Development of Economics and Finances senior economist Aviliani said that the coronavirus pandemic has helped accelerate the use of digital payments through fintech companies.
Such a move aided in improving financial inclusion, the economist said. Still, the expert pointed out that many clients need to beef up savings amid the ongoing economic and health crises.
Aviliani stressed that the banks and financial institutions should improve education efforts, specifically the public, from the lower socioeconomic bracket who need help boosting financial literacy.
The expert added that only a small portion of these people have bank accounts. Besides, some of them do not even have allotted funding for emergencies.
Citing a study by the Organization for Economic Cooperation and Development, Aviliani said that the emergency funds of most Indonesians in the lower socioeconomic bracket could only cover their spending for a maximum of seven days only.
Amid the financial constraints due to the coronavirus pandemic, a need for sufficient emergency funds and savings has become more apparent.
Boosting Financial Literacy and Savings
E-commerce platform Tokopedia recently launched the Rabu Nabung or Savings Wednesday campaign to support financial literacy education in Indonesia.
Tokopedia Fintech Senior Lead Marissa Dewi said that the program aims to teach financial management skills amongst the public, showing the ropes of saving and investing money.
Dewi said that Tokopedia has teamed up with different fintech players for its digital investment products to have a broad reach. Among these are state pawnshop Pegadaian, PT Bareksa Portal Investasi, Syailendra Capital, and Mandiri Manajemen Investasi.
Novice investors can have availed of the investment for as low as Rp 5,000 for gold digital investment program and RP 10,000 for mutual funds.
Other Initiatives to Boost Financial Literacy
There are more initiatives launched in Indonesia aimed at boosting financial literacy.
For example, Indonesia Fintech Association partnered with the National Committee for Financial Inclusion and the World Bank to execute a Kalimantan digital payment project. The team is also training the small enterprises to use digital payment.
Meanwhile, the Bank of Indonesia is developing an interconnected application programming interface (API). It is aiming to connect the fintech players and traditional financial institutions. This is to allow the clients to access one app when accomplishing financial transactions.
So far, the Bank Mandiri has opened its API to fintech companies like Dana and LinkAja.
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