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New government asked to prioritize 'financial inclusion'

Published on 15/10/2024 at 21:41 GMT+7 Reading time

The Prabowo Subianto-led new government should prioritize financial inclusion as it is expected to provide financial products and services that are accessible and affordable to all individuals and businesses, an economist suggests.

Executive Director of Segara Research Institute, Piter Abdullah Rejalam, emphasized the importance of the new government to put a priority on establishing financial inclusion as part of its economic policies.

"Access to financial services remains a significant barrier for many Indonesians, especially those in rural and low-lying areas. The new cabinet must implement policies that facilitate financial access for underserved populations," Piter said on Tuesday, October 15, 2024.

Piter, who also serves on the Bank Indonesia Supervisory Agency (BSBI), highlighted the important role of innovative financial institutions, especially in the digital financial services sector that is growing rapidly in Indonesia.

Several companies, such as KoinWorks, Bank Saqu which focuses on the "solopreneurs" segment, as well as digital service providers such as Gopay and OVO, show how technology can bridge the gap in financial access.

Technologies such as artificial intelligence (AI) and machine learning have enabled these companies to make financial services more accessible, especially for Micro, Small, and Medium Enterprises (MSMEs) and underserved communities.

KoinWorks, for example, recently launched an educational program to empower MSMEs and communities in conjunction with Financial Inclusion Month 2024.

"By leveraging AI, we can speed up the loan application process and create financial products that suit the unique needs of Indonesian MSMEs,” Benedicto Haryono, CEO and Co-Founder of KoinWorks Group, spoke to Indonesia Business Post on Tuesday, October 15, 2024.

This step is considered appropriate, considering that data shows that Indonesia's financial literacy index is at 65.43 percent, while the financial inclusion index has reached 75.02 percent. Despite the increase, efforts are still needed to increase understanding on digital financial products among communities that are not yet fully served.

Piter cited that promoting inclusivity through digital financial services has a broader impact, not only to improve the standard of living of individuals, but also to strengthen economic development in Indonesia.

"By bridging the gap in financial access, the new government can stimulate entrepreneurship, increase productivity, and contribute to the resilience of the Indonesian economy as a whole," he said.

The new cabinet that will soon be inaugurated is considered to be a momentum for technology integration in financial services which is considered important.

Digital financial service providers are expected to be examples of innovation in this sector, inspiring other financial institutions to adopt similar strategies, so that financial services can be more easily accessed by all levels of society in Indonesia.

This new cabinet presents a crucial opportunity to improve financial access for underserved communities.

“By prioritizing technology-based initiatives and encouraging inclusivity, Indonesia is expected to move towards a more equitable financial future, which ultimately contributes to national economic growth and stability,” Piter concluded.

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