InterMedia-FII-Indonesia-Presentation-to-OJK-8-8-2015

INDONESIA
KEY FINDINGS FROM YEAR 1 OF THE FINANCIAL
INCLUSION INSIGHTS RESEARCH PROGRAM
(CONDUCTED AUGUST-NOVEMBER 2014)

• Basic demographics
• Poverty measurement (Grameen Progress Out of Poverty
Index)
• Access/use of mobile devices
• Access/use of mobile money
• Access/use of formal financial services (e.g., bank
accounts)
• Access/use of semi-formal and informal financial services
(e.g., arisans (ROSCAs), cooperatives)
• Financial literacy and preparedness
• Technical literacy
• Annual, nationally representative survey (N=6,000) of
Indonesian individuals aged 15+
• Face-to-face interviews lasting ,on average, upwards of
75 minutes
• First survey (year 1) conducted from 8/3/2014 to
11/12/2014
• Provides baseline measurements; subsequent annual
surveys will measure trends and track market
developments in DFS
Source: InterMedia Indonesia FII Tracker survey (N=6,000, 15+) August-November 2014.
THE INDONESIA FII TRACKER SURVEY - DETAILS

Sample Size
The sample size is 6,000 respondents.
Target Population and Sampling Frame
The target population covered by the InterMedia survey included all individuals aged 15 and above living in 24 Indonesian
provinces. Ten provinces were excluded from the survey for logistical and cost reasons. Despite these exclusions, the
sampling frame includes 94% of the Indonesian population. The Indonesian Bureau of Statistics drew the sample based on
guidance from InterMedia and contributed input on sampling procedures at each level of stratification.
Sampling Census Blocks
The first step of the sampling procedure was to distribute the total sample of 6,000 interviews in the 24 provinces in the
sampling frame proportionally to the target population size (15+).
In each province, urban and rural sub-districts were randomly selected using a proportionate-to-population size (PPS)
method. In the selected sub-districts, small administrative units called census blocks were listed, from which primary
sampling units (PSUs) were randomly selected using a PPS method.
Sampling Households and Respondents
Within in each PSU (selected census block) a household listing was conducted with the guidance of the Indonesian Bureau
of Statistics. Ten households were randomly selected from the listing.
One respondent per household was selected using the Kish grid method and relevant consent for eligible respondents under
18 years of age was obtained.
SAMPLING METHODOLOGY
3

4
Summary of 2014 findings
• Nearly half the adult population had used financial services,
but many did not yet use formal financial services.
• Formal banks and arisans are the two dominant kinds of
financial service providers being utilized by the population
• The financial behaviors of individuals are very similar,
regardless of their financial services use.
• Adults with access to a mobile phone are generally able to
use the devices for both basic and advanced functions.
• Awareness of mobile money services was low and use was
of the services had yet to catch on.

Half of adults have used financial services; less than
one-quarter have full-service accounts
49%
Have ever used
financial services
23%
Have full-service
financial accounts
Bank
NBFI
Mobile
Money
5

Many only use either banks or nonbank financial
services
17%
12%
20%
Bank Only
Both
NBFS* Only
Those who have ever used banks, nonbank financial services (NBFS), or both
(Percentage of Indonesian adults, N=6,000)
59%
46%
42%
69%
70%
45%
29%
60%
58%
Mobile money
use is 0.1%
*NBFS (nonbank financial services) are defined as any financial service outside of fully formalized banks and mobile money providers. Within
NBFS, two distinct groups are included – nonbank financial institutions (NBFIs) and informal financial institutions (IFIs). NBFIs include rural
credit banks (BPR), cooperatives/venturas, pawn shops, and post office banks. IFIs are any of a number of informal means to accessing
financial services, such as arisans, money guards, etc.
6

Bank account holders primarily use their accounts
for depositing and withdrawing money
9%
21%
26%
29%
31%
64%
88%
Pay bills
Transfer money between
financial institutions
Save or set aside money
Receive wages from primary
or secondary job
Person-to-person transfers
Deposit money
Withdraw money
Top uses of full-service bank accounts
(Shown: Percentage of adults who have a full-service bank account, n=1,199)
20%
Have a full-service
bank account
29%
Have used a bank
account
7

Bank account users have digital access, prefer to
use a bank branch
1%
2%
3%
3%
73%
78%
Door-to-door agent
Bank's website
Over-the-counter at a retail store
Mobile app
Over-the-counter in a branch office
ATM
Preferred way to access a bank account
(Shown: Percentage of adults who have access to an account
at a full-service bank, n=1,524)
Full-service banks accounts with digital access
(Shown: Percentage of adults who have access to an account
at a full-service bank, n=1,524)
93%
Full-service bank accounts
offer digital access
8

Arisans are the most widely used NBFS;
cooperatives the most widely used NBFI
5%
6%
7%
9%
9%
12%
18%
69%
Money lender
Other
Rural credit bank*
Post office bank*
Money guard
Pawn shop*
Cooperative / Ventura*
Arisan
Use of nonbank financial services by type**
(Shown: Percentage of Indonesian adults to have ever used, n=2,055)
Arisans are an Indonesian form of a Rotating Savings and Credit Association (ROSCA). Arisans, while the most commonly used form of nonbank financial services,
are also one of the least formal types of financial services.
**Question allowed multiple responses.
*Denotes semi-formal/account-bearing nonbank financial services
• On average, people have only
ever used one NBFS.
• 32% use at least one NBFS.
• 8% use two or more NBFS.
• 2% use three or more.Have used nonbank
financial services
32%
9

10
Very few use NBFIs exclusively for access to
finance
*NBFIs (nonbank financial institutions) include rural credit banks (BPR), cooperatives/venturas, pawn shops, and post office banks.
7%
2%
36%
41%
59%
61%
65%
91%
92%
Insurance activities
Deposit/withdrawal
Loan activities
Buy airtime
P2P transfers
Receive wages
Buy goods/groceries
Pay bills
Financial behaviors in the last 90 days of exclusive
NBFI users
(Shown: Percentage aware of exclusive NBFI users, n=)
Have used a
NBFI, but not a
bank or mobile
money
Have used a
NBFI & other
financial services

11
Exclusive NBFI consider perceived fees, cost and
need a barrier to banks and their services
Proximity
6%
Exclusive
NBFI
users
7%
43% Lack of money
22% No known need
7% Do not trust banks
6% Not close to a bank
5% Not aware of banks
4% Feel using banks is
complicated
.5% Know they lack
required ID

Perceived need, resources also keep Arisan users
from bank accounts
4%
4%
14%
20%
26%
There are no banks near my home
I don't like the monthly charges
applied to my account
I don't have money to make any
transactions with such account
I do not have money
I don't need one, I don't make
transactions
Main reason for not having a bank account
(Shown: Percentage of active arisan users, n=1,013)
*Exclusive use of arisans in the past
90 days
(Shown: Percentage of Indonesian adults, N=6,000)
*Exclusive use of arisans refers to individuals that do not have bank accounts but have used an arisan in the past 90 days.
Exclusively use
arisans on a
regular basis.
(past 90 days)
15%
12

10%
19%
21%
Mobile money awareness, uptake is extremely low
6%
94%
Mobile money brand
awareness
(Shown: Percentage of Indonesian adults,
N=6,000)
31%
Top sources of mobile money brand
awareness
(Shown: Percentage of Indonesians aware of at least one
mobile money provider, n=309)
0.1%
use mobile
money
Unaware Aware !
Television
Family & friends
Billboards
Provider SMS
13

MOBILE USE & FINANCIAL BEHAVIORS
14

Mobile phone competency is high
Mobile phone uses of those with access to a phone
76%Indonesian adults own or have access to a
mobile
90% 84% 67%
Send/
receive text
messages
(SMS)
Change the
settings on
their phone
Conduct at
least one
advanced
function*
*Advanced functions include: Send picture messages (MMS); Use social networks such as
Facebook, Twitter; Watch a video they downloaded onto the phone; Follow an interactive
voice menu, voice commands; Follow a text menu such as for buying airtime; Use a chat
application such as WhatsApp or BBM; Listen to audio they downloaded onto the phone; Post
pictures online, such as via Instagram
15

43%
22%
14%
24%
I have no need for one
It is too expensive
No one in my house owns a phone
Top reasons individuals don’t have access to a
mobile phone
(Shown: Percentage of those without access, n=1,545 )
Don’t have access
to a mobile phone
Perceived need, cost hinders greater mobile phone
access
16

Many adults do not create financial plans for their
future; less than half understand loans & investments
56%
Of adults always or
sometimes have a
plan for spending
their income
8%
Of adults have a
retirement plan or a
living will
71%
understand the
concept of
interest-bearing
savings accounts
43%
exhibit
comprehension of
the concept of
returns on
investments
15%
understand how
interest rates for
loans work
17

Most people with money left over after monthly
expenses save the surplus
38% Had money left after
paying their family’s
typical expenses in
the prior month.
1. Savings (69%)
2. Loan repay (9%)
3. Entertainment (7%)
4. Investments (3%)
Where does extra money go?
18

Many savers and borrowers are unaware of their
interest rates
23%
[from a formal or informal provider]
Borrow money
42%
56%
Know the interest
rate they earn
67%
who save through formal institutions know the
interest rate they earn on their savings
Save money
[through a formal or informal provider]
84%
who borrow money from formal institutions
know the interest rate on their loans
68%
Know the interest
rate on their loans
19

NONUSERS OF FINANCIAL SERVICES
20

51%
49%
51% female
54% rural
74% below the poverty line
51% have not advanced beyond primary education
15-24
25-34
35-44
45-54
55+
30% are between the ages of 15 and 24
19% are 55 years of age or older
Have used any of financial services
Have not used any form of financial services
Nonusers of financial services
(Shown: Percentage of adult Indonesians,
N=6,000)
54% own a mobile phone
Nonusers of financial services are predominantly
under 45 and rural
21

86%
90%
80% 57%
*Question allowed multiple responses.
Most common financial behaviors of nonusers and users in the past 90 days*
(Shown: Percentage of adults who haven’t used financial services, n=2,957; users of financial services, n=3,043)
Users of financial services Nonusers of financial services
Nonusers of financial services have similar payment
and purchase behaviors to users
P2P TransfersPay for goods at a store Pay bills
58%
86%
55%
66%
Purchase airtime
Cash is the primary way nonusers engage in financial activities; virtually every nonuser utilizes cash for their financial activities.
Bartering (2%) and gold (2%) are the second and third most common ways to transact.
1. 2. 3. 4.
22

Mobile money brand awareness
Recognize at least one mobile money provider
(Shown: Percentage of users, nonusers of financial services)
Mobile money concept awareness
Recognize at least one mobile money provider
(Shown: Percentage of users, nonusers of financial services)
Users of financial services
(n=3,043)
(n=2,957)
4%
1%
9%
3%
Users of financial services
(n=3,043)
(n=2,957)
Nonusers aren’t as aware of mobile money
23

Financial insecurity of nonusers, users of financial services
Indicators of financial insecurity Total Nonusers
(n=2,957)
Users
(n=3,043)
“Rarely” or “never” have savings that are larger
than their debts
66 78 53
Had no money left over last month after paying all
of their typical family/personal expenses or even
had to borrow money to meet these expenses
62 80 43
“Rarely” or “never” have an emergency fund to
cover unplanned expenses
60 71 48
“Rarely” or “never” spend less than they earn each
month
47 55 39
“Rarely” or “never” pay their bills on time 40 50 28
Nonusers are more
financially vulnerable than
their counterparts.
There’s greater financial instability for those who do
not use financial products, vs. those who do
24

For more information, contact:
Caldwell Bishop, FII Program Associate
Bishopc@InterMedia.org
Caroline Mangowal, FII Indonesia Manager
MangowalC@InterMedia.org
Nat Kretchun, FII Asia Lead
KretchunN@InterMedia.org

InterMedia-FII-Indonesia-Presentation-to-OJK-8-8-2015

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