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Mobile innovation does the business in Indonesia

The Indonesian archipelago has been an important trade region since at least the 7th century, so it’s somewhat unsurprising that its people are enthusiastically embracing the mobile channel for payments, remittance and banking.

Indonesia consists of 17,508 islands, about 6,000 of which are inhabited. 58% of the population lives on Java, the world’s most populous island. Other major islands include Sumatra, parts of Borneo, parts of New Guinea, and Sulawesi.

Indonesia has a mobile penetration rate of 90%, equating 235.8 million mobile subscribers, while only 50 – 60 million have bank accounts. An astonishing 30 million cell phones are sold in Indonesia each year, and active SIM cards are growing by 30 – 40% per annum.

As Indonesians embrace mobile technologies, one of the largest banks in Indonesia, PT Bank CIMB Niaga, has added mobile banking to its capabilities Built on Sybase technology, CIMB Niaga customers are now able to transfer funds, access loan statements and check account information. In addition to banking services, customers can access their online bill payment service via their mobile phone to pay utilities and other bills right from their online bank accounts.

To illustrate why the mobile channel is so powerful, look no further than neighboring Philippines, one of the world’s leading adopters of mobile commerce. According to the Asian Development Bank, 35% of Filipinos have mobile phones, while 95% of the rest have access to a mobile device through friends or family. Even remote, and traditionally inaccessible areas increasingly have mobile phone coverage. It’s been estimated that basic mobile phone banking services provided by rural banks are valued at P12 billion ($250 million) in the past five years.

Both countries are island nations, challenged with unique geographies, which mobile technologies ideally address. Both have a large populace under the poverty line, resulting in the under or unbanked currently being excluded from financial participation. Last but not least, both have young populations, with aspirations and entrepreneurial spirit. It doesn’t take much imagination to see Indonesia’s mCommerce market follow and eventually even exceed the success in the Philippines. Watch this space.

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