For background on the Financial Inclusion Insights 2016 surveys, data, and reports please follow this link. The full 2016 Indonesia Annual Report can be found here.

InterMedia’s recently released Financial Inclusion Insights (FII) 2016 Indonesia Annual Report and Survey Data finds that the country continued on its gradual but steady path towards deepening financial inclusion in 2016. Thirty-four percent of Indonesian adults had access to some form of full-service financial account last year, up from 31 percent in 2015; 26 percent held a registered account with a full-service institution, slightly up from 24 percent in 2015 (Figures 1 and 2). Growth in access was strongest for traditionally underserved groups – women, those living in rural areas and those with incomes below the poverty line – a positive sign for inclusion even as these groups still lagged behind their male, urban, and above-poverty-line counterparts in terms of total levels of access and registration in 2016

Alongside this progress, however, the FII data also indicate that large gaps in Indonesians’ engagement with formal financial service providers remain. Almost three in four Indonesians do not hold a registered financial account and are likely using cash in their day-to-day lives. Sixty-three percent of Indonesian adults who saved, save at home. They rely on family and friends and turn to informal providers to borrow; 22 percent of Indonesians used arisans or rotating savings groups to borrow money and 74 percent borrowed from family and friends.  

Against this backdrop, what else does the most recent FII Indonesia data tell us in terms of mapping the route forward for financial inclusion?  

  • Banks were a powerful driver of Indonesian financial inclusion across demographics and proved to be a harbinger of advancement along the customer journey from access to active use. Banks dominate financial inclusion, which FII defines as holding a full-service registered account. Ninety-three percent of Indonesian adults who are financially included hold a bank account. Further, according to the 2016 FII data, almost one in three Indonesian adults (30 percent) reported having ever used a bank and almost one in four held a registered bank account. These numbers have gradually increased over the last three years (Figures 1 and 2).  Even among female, poor and rural market segments, the increased levels of access to formal financial institutions were largely bank driven and led to increased bank account registration. In fact, while bank users overall were disproportionately male, urban, and above the $2.50 /day poverty line, in 2016, registration increased the most among the traditionally underserved populations – female, poor and rural.​
    • Additionally, the FII study found that Indonesian adults who open a bank account become active users. Almost all full-service bank account holders (96 percent) were active users (see Figure 3).  These active bank users used their accounts most often for activities such as P2P, saving or setting aside money, and receiving wages.


Figure 1: Account access/trial

(Shown: Percentage of Indonesian adults for each year)

Figure 2: Registered users

(Shown: Percentage of Indonesian adults for each year)


Figure 3: Conversion rate for each step in the banking customer journey

(Shown: Percentage of Indonesian adults)

  • Given Indonesian’s geographic spread across islands, digital financial services (DFS) and mobile money, currently in a nascent stage, could be particularly impactful and appealing to Indonesians. Per FII data, 21 percent of those who needed credit said they could not access it because they did not know of a proximate point of service. Further, FII data show that Indonesia is home to a large population of SIM card owners, and 43 percent of phone owners are smartphone users (eight in 10 adults have access to any kind of mobile phone). Sixty-eight percent of Indonesians have the ability to send or receive a text. These are relatively promising conditions for DFS uptake. Currently DFS use in Indonesia is primarily oriented around the use of bank accounts and mobile products, such as basic wallets and digital cards that are not mobile money. To grow mobile money use, which is currently at less than 1 percent of the adult population, existing barriers highlighted in the FII data must be further evaluated and addressed. For instance, effective customer outreach to raise mobile money awareness from its currently low levels will be key (FII data finds that awareness doubled in 2016 to 15 percent from 8 percent in 2015). Of course, building awareness must be paired with financial literacy improvements and skills building; 26 percent of those who were aware of mobile money said they did not use the service to save because they did not know how to open an account. Only 5 percent of Indonesian phone users had ever made a financial transaction using their phone. Similarly, given low rates of merchant DFS adoption, merchants will need to be incentivized to accept digital payments and cash in/cash out point-of-service will need to be added. Otherwise, customers will have little incentive to adopt DFS.
    • Indonesia’s active remittance market may be an area of growing DFS innovation. Indonesian migrant workers send billions home each year and, per World Bank Group data, these numbers are increasing, often through expensive Western Union transfers or risky account mediators (holders of bank accounts who serve as intermediaries for a fee). DFS products that enable cheaper, more reliable transfers and link users to mobile money and other formal financial institution accounts could find mass appeal.


  • Formal financial services and products will only attract new users if they are designed and marketed to offer a better value-proposition than cash. Cash is the preferred transaction mode in Indonesia; 66 percent of adults reported cash as the best way of guaranteeing how money was spent and 58 percent said cash was the best option to access your money. Adults, particularly those living on less than $2.50 per day, which represent more than half the total population, as well as those in rural areas typically save in small amounts at home. Sixty percent of Indonesians reported they save, but two in three adults did so with cash at home and another 20 percent through in-kind assets such as gold jewelry.  Similarly, while almost one in two Indonesian adults said they borrowed money, 74 percent did so through family, friends, or neighbors. Cash has the appeal of being immediately available, an important characteristic for Indonesians; FII data showed the main reasons Indonesian adults, across all income levels, save is for emergencies and to make ends meet.


  • Low financial literacy in Indonesia remains a significant barrier to inclusion and could be hindering uptake of new products and services. According to the 2016 FII data, only 14 percent of the population demonstrated financial literacy, defined as holding a basic knowledge of four fundamental concepts in financial decision-making (interest rates, interest compounding, inflation, and risk diversification) as measured by the Standard and Poor’s Rating Service’s Global Financial Literacy Survey. While it is relatively low across all demographics, those above the poverty line and men tend to have the highest levels, while women and those below the poverty line tend to have the lowest levels (See Figure 4).  The FII study found that those who did not register for bank accounts had lower levels of financial literacy. Improving financial literacy through capability building applications such as those cited in a recent Center for Financial Inclusion paper could support financial inclusion. As consumers become more financially literate and as they begin to see the value of and feel more capable using a spectrum of financial services, they may be more likely to register accounts; common reasons for not registering bank accounts included a perceived lack of funds or need, and not knowing how to open an account.

Figure 4: 

These and other findings in the FII 2016 Indonesia Annual Report and Survey Data are intended to help stakeholders track access to and demand for financial services and identify drives and barriers to adoption and use. Overall, FII findings indicate that while bank-driven financial inclusion has gradually progressed in Indonesia over the last three years, and positive preconditions exist for greater digital financial services adoption in the coming years, stakeholders will need to work together if the underserved are to move from cash to formal financial services.

What recommendations for accelerating financial inclusion in Indonesia do you derive from the Data Fiinder on We’d love to hear from you.


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Contact the author:

Nadia van de Walle
Senior Research Manager

Financial Inclusion Insights


Financial Inclusion Insights is an ongoing research program funded by the Bill & Melinda Gates Foundation and designed to build meaningful knowledge about how the financial landscape is changing across the eight countries in Africa and Asia. FII produces data and analysis regarding citizens’ financial lives, attitudes, awareness and use of, access to, and advanced engagement with financial products and services. Through our qualitative and quantitative research, we aim to provide demand-side insights into consumers' financial behaviors, produce information that can guide policy interventions, and identify pathways for the poor to gain the financial tools they need to improve their economic circumstances.