Economic inequality is among the most pressing issues in the country.
According to a report by Google, Temasek, and Bain & Company in 2019, Indonesia had around 47 million underbanked and 92 million unbanked adults, which is one of the signs of the country’s unequal distribution of income and opportunity among different groups.
To solve this issue, the government and private sector have been seeking to boost financial inclusion and move toward a cashless society.
Thanks to financial technology (fintech) services such as GoTo Financial – the payment and financial services arm of the giant tech company GoTo Group – the road ahead is clear for financial inclusion in Indonesia.
Speaking at the 2020 Financing for Development Forum Side Event on April 26, GoTo Financial managing director Budi Gandasoebrata highlighted some of GoTo Financial’s efforts in tackling economic inequality and promoting financial inclusion in the country.
He explained during the event that as one of the most populous countries in the world, Indonesia actually had a lot of economic opportunities in today’s digital age.
“Indonesia has a young population and most of them are very tech savvy,” he said. Moreover, quoting the e-Conomy SEA study conducted by Google, Temasek and Bain & Company from 2019 to 2021, he mentioned that Indonesia contributed approximately 75 percent of the total internet penetration in Southeast Asia and 80 percent of Indonesian internet users were also digital consumers.
Having seen the opportunities to boost the digital economy, GoTo Financial is now working to offer a variety of products for both consumers and small, micro and medium enterprises (MSMEs) to help them unlock their financial potential.
Surviving the pandemic with the help of digitalization
In an attempt to curb the spread of COVID-19, governments across the world implemented strict policies to limit face-to-face meetings, which affected a wide range of sectors from education to business. In these trying times, going online became a solution.
Budi mentioned that there was a silver lining to the pandemic, noting that the global health crisis had accelerated the shift from offline to online and encouraged MSMEs, which accounted for 99 percent of Indonesian businesses, to adopt digital solutions.
Although a 2020 study by the Indonesian Institute of Sciences (LIPI) and Cooperatives and SMEs Ministry found that 95 percent of MSMEs had experienced declining revenues during the pandemic, business solutions offered by GoTo Financial have helped them survive the uncertain times.
Tableware ceramics shop Carramica is among the examples of MSMEs that adopted GoTo Financial’s business solutions during the pandemic.
Founded in May 2020, the dynamic duo Dea Carissa Desmonda and Putu Ayu Kartika “Tika” Utami had to temporarily close down their two stores in Green Lake, West Jakarta, and Pondok Indah, South Jakarta, following the public activity restrictions (PPKM).
Although the offline stores suffered, the online store managed to contribute 70 percent of the total sales and they also saw a surge of online orders during Christmas.
After signing up with GoStore, a simple e-commerce website for businesses selling online, Dea noted that Carramica’s daily operations became more efficient amid a lack of manpower.
“Previously, we could only handle around 100 customer orders via WhatsApp per day. With GoStore, we managed to handle two to three times more orders, as the platform helps us to cut lead time and man hours, making it more efficient,” said Dea, adding that GoStore’s built in payments, including GoPay, GoPayLater and bank transfers, also helped simplify transactions.
“We are also grateful for Moka. Our stocking system is now more organized,” added Dea, talking about the point-of-sales software.
Carramica’s experience is in-line with research conducted by the University of Indonesia’s Institute of Demographics (LD FEB UI) which found that 49 percent of MSME partners used GoTo Financial products to help them sell online for their first time.
“Not only has it helped them make their businesses much more resilient, effective and efficient, but we have also enabled them to grow and expand their reach nationwide”, Budi said, adding that 83 percent of MSME merchants experienced an improved quality of life after using GoTo Financial products and services.
Empowering MSMEs through training
Amid its success in providing all-in-one payment and business solutions in one ecosystem, GoTo Financial also realizes the importance of providing MSMEs with a sustainable business.
Budi explained that GoTo Group had provided a variety of knowledge sharing and training platforms for each product. Each was customized to accommodate the different needs of the business.
Among the programs are the GoTo Financial Retail Community (KONTAG) and the GoFood Partners Community (KOMPAG) by online food delivery service GoFood. Both programs are part of the Business Partner Academy (KAMUS) and seek to help MSMEs build business skills through essential training sessions and serve as a networking hub for merchants to share and exchange ideas.
“[The training programs] happened all year long during the pandemic,” he said, adding that the programs aimed to guide merchants through changes to their businesses, especially those who were going online for the first time.
Moreover, GoTo Group has also teamed up with government agencies to empower MSMEs in selling products and services using digital solutions. Among the campaigns are Proudly Made in Indonesia (Bangga Buatan Indonesia) and GoNusantara.
Financial inclusion for all Indonesians
While MSMEs are being equipped with the essential technology to develop their businesses, here comes the next question: As the digitalization of the finance sector becomes increasingly inevitable, how does GoTo Financial help the 47 million underbanked and 92 million unbanked adults benefit from the digital economy in Indonesia?
Budi mentioned that the GoTo ecosystem owned a so-called “super-app” that assisted consumers from the moment they woke up until the moment they went to sleep. Among the features were Tokopedia for customers to pay bills, a buy-now-pay-later service by GoPayLater and much more.
Budi mentioned that the company believed digital payments were a gateway to be included in wider financial products.
“Once they have embraced digital payment solutions, it will be relatively easier to offer them other financial services, such as paylater or opening up a bank account,” he said, adding that the company also collaborated with Bank Jago, which enabled users to open a bank account directly from the app without having to queue at a bank.
Beyond opening a bank account, Budi mentioned that the integration allowed users to integrate their Jago accounts with the Gojek app and use the account as a source of funds to pay for different services available on the Gojek app. Users can easily manage their finances and create different Jago pockets to better separate spending and savings.
With these payment and business solutions coming to everyone’s smartphones, it is about time for them to enjoy the benefits of the digital economy.
