Moving Financial Inclusion Forward. 3 rd Annual Islamic Finance Conference 5 July 2018

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1 Moving Financial Inclusion Forward 3 rd Annual Islamic Finance Conference 5 July 2018

2 29 Kantor Cabang yang tersebar di seluruh Indonesia untuk melayani Masyarakat Pra-Sejahtera Produktif Empowering Productive Poor in 23 Provinces #6 BUS in Asset Customers Employees Asset IPO Listing Established in 2010 as Sharia Unit, spun off in 14 July millions (100% female) ~ 12 thousands (> 90% female) 9.5 trillion 8 May 2018 As of Dec 2017 As of Q As of Q As of Q Banda Aceh Medan Pekanbaru Pontianak Padang Jambi Lampung Jakarta Palembang Bandung Tegal, Pekalongan Banjarmasin Semarang Denpasar Yogya Palangkaraya Samarinda Surabaya Mataram Makasar Kendari Kupang

3 Breaking the Unbankable Myth Bank s Perspective: Productive Poor is unbankable Productive Poor s Perspective: We are not fit for bank Source: Synovate Research (2008) perceptions on bank service Paradigm Shift is Necessary Make micro business bankable Build a welcoming bank culture for EVERYONE How long does it take to empower productive poor and make them micro business bankable? A few banks have succeeded in embracing their micro business customers within a year of business

4 Empowerment Program to Nurture 4 Key Characters Working Capital Starting from IDR 1.5 mio Opportunity for education & renovation financing Training Program Entrepreneurial Skills, Health Awareness, Community Development Nurturing Key Characters Courage Discipline Hardwork Solidarity Membership Women, screening system, bi-weekly meeting Serviced by Trained Staff High school graduate, role model in showing honesty, discipline and politeness

5 Leveraging The challenge Technology perception, location to Better Serve the Productive Poor Customers and inviting them to take part in embracing technology.

6 Building a User-Friendly Ecosystem Towards digitalization Using a tablet-based solution to digitalize the field staff, and move away from paperintensive processes. Daily working time becomes 38% more efficient Mobile front-end system Attendance data collection turns into fun photo moment

7 Digitizatizing time-consuming paper-based processes

8 Building a User-Friendly Ecosystem Pioneering cashless environment Laku Pandai to enable digital financial transactions of our customers through agent banking "Becoming an agent gives me not only extra income, but also a chance to help my neighbours to develop savings habit," Aeng Kharieah, Bandung, Financing Customer Capacity building Saving Protection Payments & Transactions Agent Tools E-commerce Financing "Customers pay for their batik order through Wow! ib, it is easier since they are from out of town," Sri Agustin, Cirebon, Financing Customer

9 Initiating Steps to Build Sharia Digital Ecosystem Digital Community Simplify existing financing solution, through possibility to repay loan in easier, more secure, people-lite way Introduce new savings solution to unbanked customers, allowing to save in a simple, secure, and transparent way Introduce new functionalities to perform transactions (e.g., bill payments, top-ups) in cashless way

10 Challenges Customer Shifting of digital habit Continuous education Infrastructure Telco data network availability Subscription & servicing pricing Financial Institution Internal servicing process Cash Management & logistic

11 Together, we create opportunities to grow and live a meaningful life