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The Hopes of Co-Minister for Economy Affairs, Darmin, for the FinTech

financial technology fintech government

Coordinating Minister for Economy Affairs, Darmin Nasution, hoped that the presence of financial technology (FinTech) could contribute to help the government achieve the financial inclusion target of 75 percent this year. This is because FinTech is more capable to reach people in various regions and from a variety of backgrounds.

According to the data from the World Bank, saving ratio against Indonesia’s Gross Domestic Product is still at the level of 31 percent in 2017. The value is considerably high, but still low compared to China and Singapore that reached 46 percent.

“Thailand even reached 34 percent,” Darmin said at Indonesia FinTech Summit & Expo (IFSE) in Jakarta Convention Center, Jakarta on Monday (23/9). For this reason, Darmin said that the government will launch the Inclusive National Financial Strategy based on the Presidential Regulations No. 82 of 2016.

Darmin: FinTech Has a Big Role in Inclusive Financial

“According to the survey by the Financial Services Authority in 2016, the number of adult residents who have priority access or formal financial services was 48.9 percent. It can be concluded that many people haven’t got an account or access to financial services.” Darmin said.

That value is higher than in 2014 which only 30 percent. However, Darmin said that Indonesia still requires a lot of effort to reach the 75 percent financial inclusion target. As a consequence, FinTech in Indonesia is expected to contribute to this effort.

“People need to save money and financial service which is easier and affordable,” Darmin explained. Since people need financial services which are easier and more favorable, FinTech can facilitate this preference through their digital services. Eventually, FinTech will have a significant role in financial inclusion.

Based on data from the Indonesian Fintech Association (Aftech), 70 percent of the FinTech portfolio consists of people who are unbanked and underbanked. That’s why the government has four expectations related to this fact. One of them is that FinTech can reach populations in the deepest regions of Indonesia.

The Four Expectations of Government for FinTech

The government has four expectations for FinTech. First, FinTech has to be able to reach populations in the outer regions of Indonesia. Second, FinTech can work with banking agents to reach this target. For example, they can have more subsidiaries in the deepest regions.

Third, Darmin explained that FinTech industry should not focus on making profits only. It also needs to focus on increasing the education and protection of consumers. Last but not least, FinTech can integrate itself with the real economy sector in the long term.

“FinTech should be able to integrate with the real economy sector, particularly those who have adopted technology,” he added. Meanwhile, Darmin ensured that the government should continue to improve the supporting ecosystem for FinTech to grow. As a result, there would be a balanced ecosystem.

In this case, the government would prepare to build internet network infrastructure, increase financial literacy, and create a supportive regulatory framework. This way, the FinTech industry can be encouraged to contribute to the target of financial inclusion in the future.