03 Jul, 2017

Laku Pandai: Catalyst for Financial Inclusion in Indonesia

03 Jul, 2017

Indonesia has the 4th biggest population in the world with a total of 260 million. Among them, 203 million people earns below $4.5 per day. Most of them don’t have access to formal banks. However, they do play a huge role on Indonesia’s economy, 57% of the nation’s GDP is generated by more than 56.5 million Micro Small Medium Enterprise (MSME). The problem is around 74% of the population do not have formal bank accounts and in turn 79% of the MSME do not have access to any type formal financial services that could provide financial service such as microfinancing. These condition exposes them to financial risks.1

Microfinance offers financial services to low-income earning individuals and companies that includes micro-credit (very small loans under IDR 20 million without collateral, often repayable within 6 to 12 months), micro-savings (small deposits under IDR 20 million) and micro-insurance (insurance premium under IDR 50,000).

Indonesia itself has a large micro-financial sector, with a range of commercial banks. However, like mentioned before, 79% of the 56.5 million MSME don’t have adequate access to the bank financing they need to grow and secure their businesses, particularly in rural areas.

Since 2013, the government has tried to tackle the problem by introducing a new regulation called Laku Pandai which is a short for Layanan Keuangan Tanpa Kantor dalam Rangka Keuangan Inklusif (Branchless Finansial Service for Financial Inclusion). The Financial Service Authority (OJK) created this program to provide the people with simple and easy to understand financial service for the unbanked. The program offers Basic Saving Account (BSA), credit, financing and insurance for the “micro” customer.

The outreach strategy of Laku Pandai utilizes branchless banking which means it could be easily accessed online or from nearby small shops that has been authorized to become an agent. Utility bills such as electricity or water could easily be paid using the facility. Now, instead of going to the bank in the city, people could easily access financial services by going to the shop in the neighborhood or, even easier, from your very own smartphone.

As of March 2017, the Laku Pandai has succeded bringing 5 million customers with outstanding savings of IDR 244 billion. The program has been established in all 34 countries involving 19 conventional banks, 2 syariah banks and 328.466 agents.2


  1. New Indonesian ‘Branchless Banking’ and Microfinance Laws – a catalyst for microfinance growth? By KPMG
  2. http://www.ojk.go.id/id/Pages/Laku-Pandai.aspx


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