Currently just over half the country remains unbanked according to the World Bank Group’s Global Findex database of how people save, borrow and make payments.
“We believe that a strong collaboration between financial services providers and technology companies can reach a wider range of people who have difficulty accessing financial services, such as unbanked communities,” Go-Jek president Andre Soelistyo said in a statement reported by Reuters.
And there are many such communities across the country’s 17,000 islands which traditional banks have struggled to serve. But with mobile subscriptions outnumbering the population, tech companies have spotted a gap and expanded into the financial services arena.
Go-Jek launched its Go-Pay mobile payment platform more than two years ago, finding rapid uptake with users of its ride-hailing app who were able to easily pay and tip drivers; half of Go-Jek’s 100m monthly transactions are now processed through Go-Pay, the Nikkei Asian Review noted.
Overall, however, such e-payments remain a small part of the total payments market at just 2.1%, although this share is growing fast and is forecast to hit 24% by 2027.
And a report by investment bank Morgan Stanley says that “over the long term, fintech companies will take some share of [traditional] banks’ businesses, either in existing or potential segments that could have been grabbed by banks”.
Smart banks are going with the flow and partnering with tech companies. Bank CIMB Niaga, for example, picked up 940,000 new customers by opening up accounts for Go-Jek and Grab drivers, most of whom were previously unbanked.
“We see Go-Pay as a bridge for the unbanked to reach a formal financial sector,” explained Go-Pay chief executive Aldi Haryopratomo.
“For some of our partners – drivers and merchants – partnering with us is their first step towards the formal financial sector,” he told Nikkei. “We’re also planning to partner more intensively with established financial institutions,” he added.
Sourced from Reuters, Nikkei Asian Review, World Bank Group; additional content by WARC staff