NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, March 27, 2015

The Financial Services Authority (OJK), along with four of the nation’s largest banks, launched on Thursday a nationwide campaign on financial services without physical branches to help boost access to the banking system in rural areas.

The Laku Pandai, popularly known as branchless banking, program promotes banking and financial services for all through the help of other parties, such as individual and institutional agents, supported by mobile phones and IT facilities.

State-owned Bank Mandiri and Bank Rakyat Indonesia (BRI) as well as private lenders Bank Central Asia (BCA) and Bank Tabungan Pensiunan Nasional (BTPN) — have already obtained permits from the OJK to run the program with their own strategies and approaches.

OJK chairman Muliaman Hadad said the program was based on the National Strategy of Financial Inclusion (SNKI) launched by the government in June 2012 to help increase financial access in Indonesia, where only 20 percent of the 250-million population has access to banks.

“The Laku Pandai program will provide simple and easy-to-understand bank and financial-institution services, because we know that so many Indonesians don’t have access to banks, which have a limited number of branches and require several official documents from their customers,” Muliaman said at a press conference.

Muliaman said three types of banking and financial services — savings, loans and other services, such as micro insurance — would be offered by the banks involved in the program through their agents.