JAKARTA (TheInsiderStories)–Financial technology (FinTech) could help Indonesia’s micro, small, and medium enterprises (micro-SMEs) and boost the financial inclusiveness.

CEO of International Finance Corporation (IFC) Philippe Le Houérou said on Tuesday (31/07) in a press release that Indonesia’s micro-SMEs suffer difficulties in accessing credit. The finance gap for micro-SMEs was estimated at US$166 billion or 19 percent of GDP in 2017, even though the micro-SMEs have an important role in Indonesia’s economy. There are 58 million micro-SMEs in Indonesia that employ 89 percent of the private sector workforce and contributes to 60 percent of the country’s GDP.

According to Le Houérou, Indonesia has taken several important steps to expand financial inclusiveness, but more needs to be done to bridge the financial access gap.

“With the right regulatory and supervisory frameworks in place, FinTech can give customers access to payment services, savings, investment, credit, and insurance,” he said in a press release.

There are 63 registered FinTech and a company namely PT Pasar Dana Pinjaman that pocketed FSA permission to disburse loans. However, Indonesia FinTechAssociation recorded 235 FinTech companies as its members with over half of those established in the last two years. Digital payments by FinTechs have reached a total transaction value of US$21 million.

The FinTech lending is expected to improve Indonesia’s low level of financial inclusiveness. Only 49 percent of adults in Indonesia have access to formal financial services, according to the 2017 Findex.

The FinTech is expected to help Indonesia’s goal to increase the financial inclusiveness to 75 percent by 2019. FinTech has a big opportunity in Indonesia as over 69% of the unbanked population own personal mobile phones.

“We firmly believe that FinTech can collaborate with existing financial institutions to extend their reach and significantly improve product-market fit,” Le Houérou added.

Indonesia’s FinTech industry grew rapidly which has more than 30+ million users, 3+ million agents covering 350 counties/cities.

Written by Staff Writer, Email: theinsiderstories@gmail.com