Unlocking the transformative potential of branchless banking in Indonesia

Tim Stapleton*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    8 Citations (Scopus)

    Abstract

    Branchless banking has the potential to significantly enhance financial inclusion among Indonesia's large and geographically disparate unbanked population and to connect Indonesia's micro, small and medium enterprises to the global economy. Why has the branchless-banking revolution not yet materialised? Constrained by regulation, deployments have failed to attract a critical mass of users. Indonesia's fragmented telecommunications sector has made it difficult for providers to emulate the success stories in other countries, in which dominant providers are competing for the market with a proprietary platform. In Indonesia, it is likely that a considerable degree of interoperability will be required for providers to unleash network effects and attract users. Indonesia's providers are experimenting in this space. Recognising branchless banking's potential to accelerate financial inclusion, Bank Indonesia appears committed to improving the regulatory framework. This article identifies the components of an enabling regulatory environment. Success in Indonesia would provide a model for a more widespread uptake of transformative branchless banking.

    Original languageEnglish
    Pages (from-to)355-380
    Number of pages26
    JournalBulletin of Indonesian Economic Studies
    Volume49
    Issue number3
    DOIs
    Publication statusPublished - 2013

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