Trust Issues Hamper Indonesia’s Government Endorsed Financial Inclusion Campaign
The government’s joint effort with banking institutions to promote financial inclusion across the archipelago is facing a major hurdle as most people from low-income households are reluctant to let individual agents take care of their savings under the government-endorsed branchless banking program, a recent study has revealed.
The Financial Services Authority’s (OJK) branchless banking program, locally known as Laku Pandai, offers banking and financial services to all Indonesian citizens through the help of other parties, including individual and institutional agents, whose work is supported by cellphones and other IT facilities.
The program, which was launched in March last year, aims to help increase financial access in Indonesia, where only 20 percent of the country’s 250 million population have access to banks.
However, a study published by Jakarta-based Atma Jaya Catholic University in cooperation with Global Affairs Canada, found that only 33.75 percent of 400 low-income families surveyed said that they would entrust their money to individual agents, even though they actually represent one of eight participating banks, including Bank Rakyat Indonesia (BRI), Bank Mandiri, Bank Central Asia (BCA) and Bank Tabungan Pensiunan Nasional (BTPN). The study was carried out between July and August last year in four major cities: Medan, Yogyakarta, Surabaya and Makassar.