fii indonesia presentation to in-country stakeholders june 2016

FII IndonesiaPresentation of findings from two years of research

Findings summary

Financial inclusion held at approximately one-quarter of Indonesian

adults

Nearly two-thirds of adults have used informal or formal financial

services

29 percent of adults have used some form of NBFI, but 3 percent

have an account at an institution that offers services such as savings

accounts, money transfer capabilities, insurance, or investments

Awareness of points of service and understanding of the financial

services available to them are barriers to nonusers

Overall financial inclusion remained at just under one-quarter of adults; bank account ownership is on the rise

24%

23%

Financially included

0.3%

23%

3%

0.1%

20%

4%

Mobile money

Bank

NBFI

2014 (N=6,000) 2015 (N=6,060)


Source: InterMedia Indonesia FII Tracker surveys Wave 1 (N=6,000, 15+), August-November 2014; Wave 2 (N=6,060, 15+), August-November 2015.

Growth in financial inclusion is limited to urban adults

Financially included(Shown: Percentage of Indonesian adults for each year)

39% 40%

14% 14%

Above $2.50 a day poverty line(2014, n=2,239; 2015, n=2,462)

Below $2.50 a day poverty line(2014, n=3,761; 2015, n=3,598)

27% 28%

20% 21%

Male (2014, n=2,367; 2015, n=2,352)

Female (2014, n=3,633; 2015, n=3,708)

2014 2015

31% 34%

15% 14%

Urban (2014, n=3,160; 2015, n=3,210)

Rural (2014, n=2,840; 2015, n=2,850)

2014 2015 2014 2015

LocationGenderPoverty level

24%

23%


2014 (N=6,000) 2015 (N=6,060)


Over half of bank savers know the interest rate on their accounts; informal savers are less likely to know their rates

5%

7%

11%

24%

30%

74%

Buying goods as investments(i.e., property, agriculture…

Savings or lending group

With people in the community

In-kind assets, such as gold

Bank

Cash at home

2015: Savings(Shown: Percentage of Indonesian adults, N=6,060)

Currently have savings

73%

24% of savers know the interest rate

they earn.

2015: Location of savings*(Shown: Percentage of Indonesian adults who save, n=4,467)

56% who save at a bank know their interest rate.

Top reasons for saving money:Making ends meet (63%);

Protecting one’s family from poverty and crime (45%)

*Question allowed for multiple responses. Source: InterMedia Indonesia FII Tracker survey Wave 2 (N=6,060, 15+), August-November 2015.

2015: Borrowing(Shown: Percentage of Indonesian adults, N=6,060)

7%

9%

16%

17%

21%

80%

Cooperatives

Banks

A group that lends to others, withinterest

Layaway purchase/loan

An informal moneylender

Family or friends

2015: Source of loans*(Shown: Percentage of adults who borrow, n=3,821)

53% of borrowers know the

interest rates on their loans.

have borrowed money

61%

Family, friends and other personal connections are preferred sources of loans


0%

0.5%

4%

6%

7%

10%

92%

Agriculture

Property

Educational policy

Vehicle

Retirement/pension

Life

Medical

2015: Insurance(Shown: Percentage of Indonesian adults, N=6,060)

haveinsurance

22%

89% with medical insurance bought it through the government; 7% acquired it through a private or bank provider.

2015: Type of insurance*(Shown: Percentage of Indonesian adults with insurance, n=1,327)

Few have any form of insurance and of those that do, most only have government-sponsored medical insurance


Both men and women primarily rely on their spouses for financial advice, but men are more likely to rely on themselves

Source: InterMedia Indonesia FII Tracker survey Wave 2 (N=6,060, 15+), August-November 2015.

0.6%

11%

34%

51%

Bank

Myself

Friends, family andneighbors

Spouse

2015: Top sources of financial advice(Shown: Percentage of Indonesian adults, N=6,060)

56% of women, versus 47% of men rely on their spouse as their primary source of financial advice.

15 to 24 (11%) year olds and those over 54 (15%) are the most likely age groups to rely on themselves.

12% of men vs. 9% of women rely on themselves.

Differences in financial goals by gender and age provide opportunities for targeted financial products


6%

9%

12%

19%

22%

Growing my or my familymember's business

Paying school fees

Building or upgradingthe home/property

Preparing for theexpenses of a child

Make more money

2015: Most Important Financial Goals(Shown: Percentage of Indonesian adults, N=6,060)

22% of women list preparing for a child as their most important financial goal

15 to 24 year olds in particular have different financial goals from other age groups. After making more money, these youth are most concerned with acquiring assets like motorbikes or TVs, or paying school fees.

People are reluctant to express confidence in their financial management skills and happiness with their financial situation

20%

2%

5%

62%

19%

25%

14%

38%

32%

5%

38%

36%

0.2%

2%

3%I am satisfied with my present financial condition.

I have the skills and knowledge to manage my finances well.

I have too much debt right now.

2015: Views on financial competency and situation(Shown: Percentage of Indonesian adults, N=6,060)

Neither agree nor disagree Agree Strongly AgreeStrongly Disagree Disagree


There are different mindsets around investing and spending money versus saving it; many are adverse to debt

11%

2%

17%

60%

22%

60%

22%

29%

16%

7%

42%

7%

0.4%

4%

0.2%

I am comfortable having some debt to accomplish my goals.

When you have some money, it is better to use or invest it right away. Just keeping it sitting there is wasteful.

I buy from several different shopkeepers so that they know me and will give me credit when I need it.

2015: Views on financial competency and situation(Shown: Percentage of Indonesian adults, N=6,060)

Neither agree nor disagree Agree Strongly AgreeStrongly Disagree Disagree


62%38%

Has ever used a financial service (formal or informal)

Has never used financial services

10%

37%

14%

40%

Other informal services

Informal savings groups

Multifinance institutions

Account-bearing Formal institutions

Banks, mobile money, NBFIs

Money guard, money lenders, etc.

*Does not show overlap in services. Source: InterMedia Indonesia FII Tracker survey Wave 2 (N=6,060, 15+), August-November 2015.

Nearly two-thirds of adults have used financial services, primarily formal institutions and informal savings groups

2015: Experience using financial services(Shown: Percentage of Indonesian adults, N=6,060)

2015: Type of financial services used*(Shown: Percentage of Indonesian adults, N=6,060)

33% have only used one of these four types of services;29% have used two or more;1% have used all four types

62%38%




Below poverty, rural and those under 35 have the greatest untapped potential for financial services use


61% 64%

39% 36%

Male Female

67% 58%

33%42%

Urban Rural

72% 56%

28%44%

Above $2.50 a day povertyline

Below $2.50 a day povertyline

56% 67%44%

33%

Under 35 years old Over 34 years old

2015: Demographics of nonusers and users of financial services(Shown: Percentage of adults, by demographic)

40% 37%Formal

institutionsInformal

savings groups

Multi-finance Institutions

Other informal services

51% 49%

Male Female

62% 38%

Urban Rural

53% 47%

Above poverty Below poverty

39% 61%

Male Female

48% 52%

Urban Rural

41% 59%


59% 41%

Male Female

69%31%

Urban Rural

59% 41%


46% 54%

Male Female

52% 48%

Urban Rural

40% 60%


Informal savings groups serve the marginalized consumer; multi-finance institutions’ serve a more affluent population


Demographics of different types of financial services users(Shown: Percentage of adults by user type)

3%

4%

18%

18%

45%

Mobile money doesn't provideany advantage over what I

currently have

No one I know uses the service

Don't know how to open anaccount

Don't make any financialtransactions or have money to

make transactions

Don't understand what theservice is or can be used for

6%94% 8%92%

2014(N=6,000)

2015(N=6,060)

Mobile money brand awareness(Shown: Percentage of Indonesian adults, by year)

Reason for not using mobile money(Shown: Percentage of mobile money aware nonusers, n=401)

Mobile money brand awareness does not yet translate into meaningful knowledge


3%

4%

5%

22%

47%

No banks near where I live

Don't know how to open one

Don't know what it is

Don't need one, don't make anyfinancial transactions

Don't have money/ don't havemoney to make transactions

20%80%

23%77%

2014(N=6,000)

2015(N=6,060)

Bank account ownership(Shown: Percentage of Indonesian adults, by year)

Reason for not having a bank account(Shown: Percentage of adults without bank accounts, n=4,697)

The perceived cost of bank account ownership is the largest barrier to increased uptake


68%

51%

0.9%3%

28%32%

9%12%

16%

5%1% 2%

34%32%

22% 21%

12%

4%2% 2%

30%27%

22%20%

4%

40%

8%10%

47% 47%

Any POS* Informal group MM agent Retail store with anMM agent

Bank branch ATM BPR** Cooperative

2015: Proximity to points of service (POS) for financial institutions(Shown: Percentage of Indonesian adults N=6,060)

Indonesians know of at least one point of service in their area; very few know of any mobile money agent locations

1-5 kms from home More than 5 kms from homeLess than 1 km from home Don’t know

*POS includes post office banks and pawnshops; not shown. **A BPR (Bank Perkreditan Rakyat) is a rural credit bank. Source: InterMedia Indonesia FII Tracker survey Wave 2 (N=6,060, 15+), August-November 2015.

2015: Key indicators of preparedness for digital financial services (Shown: Percentage of Indonesian adults, N=6,060)

68% 62% 63% 96% 99% 76%

79%

Have access to a mobile phone

69%

Ever send/receive text messages

98%

Have basic numeracy

99%

Have the

necessary ID*

62%

Own a SIM card

62%

Own a mobile phone

2014(N=6,000)

The majority of Indonesians have the necessary tools and technical skills to use traditional and digital financial services


Bank account holders are using their accounts for activities beyond deposits and withdrawals

0.3%

0.7%

1%

20%

76%

0.3%

0.9%

1%

26%

68%

A door-to-door banking agent

Over the counter at a retailstore

Mobile application

Over the counter at a bankbranch

ATM 2014 2015

Deposit or withdraw money (95%)


Save or set aside money (34%)


Send or receive money (31%)


Transfer money between their bank account and

another financial institution(21%)

Transfer money between their bank account and

another financial institution(37%)

Receive wages from primary or secondary jobs

(29%)

Receive wages from primary or secondary jobs

(30%)

Preferred means of bank account access(Shown: Percentage of bank account holders, by year)

Most common uses of bank accounts(Shown: Percentage of bank account holders, by year)

2014 (n=1,199) 2015 (n=1,363)


There are signs of active engagement with advanced bank account functions – such as savings and receiving wages

9%

16%

22%

29%

35%

Pay bills

Transfer money to or from another financial institution

Send or receive remittances

Receive wages

Save money

Most common monthly activities beyond deposits, withdrawals, and account maintenance (Shown: Percentage of bank account holders, n=1,363)


64% have used at least one of these in the past month30% have used two or more;12% have used three or more;

Just under three in ten adults have used at least one type of NBFI; most NBFI users only use a single type of service

1%

2%

4%

6%

7%

2%

4%

5%

11%

14%

BPR

Pawnshop

Cooperative

Post office bank

Multifinance6% of adults

have used 2 or more of these

services.

2% are active users of 2 or

more services.

Access and active use of NBFIs by type of NBFI(Shown: Percentage of Indonesian adults, N=6,060)

29%71%Have used

NBFIs

Have used the service in the past 90 days (active use)

Have ever used (accessed) the service


Ever used NBFIs(Shown: Percentage of

Indonesian adults, N=6,060)

3% of adults have a full-service account

Obtaining loans drive most of NBFIs use; use of Post Office Banks is driven by G2P payments, remittances

2%

4%

5%

11%

BPR

Pawnshop

Cooperative

Post office bank

Multifinance

Access to NBFIs by type of NBFI(Shown: Percentage of Indonesian adults, N=6,060)

Post OfficeBank

Cooperative Pawnshop BPR

Receive government payments

(46%)

Loan activities (65%)

Loan activities (72%)

Loan activities(70%)


Deposit or withdraw money

(56%)


(25%)


(68%)



Pay bills (5%)

Account maintenance

(7%)

Pay bills(18%)


activities (14%)


activities (2%)

Save or set aside money

(6%)

Pay government bills, taxes or fines

(2%)

Pay bills (8%)

Pay rent (0.8%)

Send or receive money

(4%)


Have ever used (accessed) the service

NBFIs are often considered services for traditionally marginalized groups, who are aren’t using these services actively

1%

2%

4%

6%

7%

BPR

Pawnshop

Cooperative

Post office bank

Multifinance

18%

Of adults are active users of NBFIs

18%

17%

16%

21%

16%

19%

17%

19%

Over 34 years of age(n=3,941)

Under 35 years of age(n=2,102)

Below the $2.50 a day poverty line(n=3,598)

Above the $2.50 a day poverty line(n=2,462)

Rural(n=2,850)

Urban(n=3,210)

Female(n=3,708)

Male(n=2,352)

Active NBFI use by demographic groupActive NBFI use by type of NBFI(Shown: Percentage of Indonesian adults, N=6,060)

Active NBFI use


Have used the service in the past 90 days (active use)

Most NBFIs are used over the counter (OTC) rather than by opening an account in one’s name

0.7%

0.1%

1%

1%

0.6%

1%

2%

0.4%

0.3%

0.1%

0.5%

4%

0.8%

3%

2%

6%

BPR

Pawnshop

Cooperative

Post office bank 11%

5%

4%

2%

Have an account offering a full suite of financial services

Have a credit only account or account that does not offer a full-suite of financial services

Use services OTC at an institution offering a full suite of financial services

Use services OTC at an institution that only offers credit services

NBFI use by OTC vs. registered account and full-service vs. credit only institutions(Shown: Percentage of Indonesian adults, N=6,060)


62%38%




Efforts directed at rural, younger and lower income groups are going to have the greatest ceiling for increasing access to financial services


Under 35 years old

Below

$2.50/day poverty line

51%

Male

Rural

54%

70%

52%

Demographics of nonusers of financial services(Shown: Percentage of nonusers, n=2,144)


Lack of awareness of points of service is a barrier to financial services for nonusers

4%6%

40% 40%

7%

17%

32%

13%16%

59% 59%

20%

35%

54%

Bank branch ATM Banking agent Mobile moneyagent

Retail store withan MM agent

BPR Cooperative Post office bank Pawnshop Informal savingsgroups

Has ever used a financial service (formal or informal)(n=3,916)

Has never used financial services(n=2,144)

Adults who don’t know where a point of service is located for specific financial institutions(Shown: Percentage of Indonesian adults N=6,060)

97%95% 94%93%88%88%

Indonesia FII 2015 Tracker Survey Details

Survey Summary Data Collected

Annual, nationally representative survey (N=6,060) of Indonesian individuals aged 15+

Basic demographics & poverty measurement (Grameen Progress out of Poverty Index)

Face-to-face interviews lasting, on average, 83 minutes Access/use of mobile devices

Second survey (wave 2) conducted from 8/2/2015 to 11/15/2015

Access/use of formal financial services (i.e.: banks, mobile money)

Tracks trends and market developments in DFS, based on the information gathered in the first survey (conducted 2014)

Access/use of semi-formal and informal financial services (i.e.: cooperatives, pawnshops, informal savings groups, etc.)

General financial behaviors


Sampling Methodology

Sample size

The sample size was 6,060 respondents.

Target population and sampling frameThe target population covered by the InterMedia survey included all individuals aged 15 and above living in 25 Indonesian provinces. Ten provinces

were excluded from the survey for logistical and cost reasons. Despite these exclusions, the sampling frame includes 94 percent 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 6,060 interviews in the 25 provinces in the sampling frame

proportionally to the target population size (15+).

In each province, urban and rural subdistricts were randomly selected using a proportionate-to-population size (PPS) method. In the selected

subdistricts, 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.


Caldwell Bishop, Research Manager ([email protected])

Caroline Mangowal, FII Indonesia Manager([email protected])

Nat Kretchun, FII Asia Lead ([email protected])

For more information, contact:

mailto:[email protected]



fii indonesia presentation to in-country stakeholders june 2016

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