Empowering Indonesia's fast-growing businesses and digitally savvy population
14 June 2022
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Author: Ronald Molenaar, Country Manager, Indonesia, ADVANCE.AI


Ronald Molenaar is the Country Manager of ADVANCE.AI in Indonesia, Asia's home of unicorn companies. With over 20 years of experience in tech, finance and fintech in Indonesia and across the world, Ronald understands the needs of fast-growth businesses whether it's scaling, expanding across borders, or adapting to new ways of working as digital transformation accelerates. Pak Ronald, as he is often known among ADVANCE.AI's customers, is always exploring ideas with internal teams as well as with prospects and customers on how we can elevate businesses and people together in a better, safer and more financially inclusive world.


Indonesia currently has a population of over 273 million. People are on their mobile phones all the time, and Indonesians do everything with their mobile phones. It may sound like an over-generalisation but if you're in Indonesia's metropolitan cities like Jakarta and Surabaya, you'll be able to see that for yourself. In fact, Indonesia is the world's fourth largest smartphone market after China, India and the United States and is expected to reach over 238 million users by 2026, according to statista.com.


Our high mobile usage isn't something that's brought about by the pandemic; Indonesians have been quoted for our high digital usage in many regional and global reports. Indeed, mobile is a big part of our lives whether it's connecting with friends and family on social media, buying necessities online or ordering food from our favourite restaurants via mobile apps. So, rather than a consequence of the pandemic, mobile usage grew even more as Indonesians had to to go online when physical shops closed – since a lot of what we could easily buy offline before were only available via apps and e-commerce stores – including those that didn't use online services before the pandemic. Now, as physical activity resumed, digital usage didn't go away. Instead, it has become even more ingrained in Indonesian life.


Sprouting of individual, small and medium businesses


The economic impact of the Covid pandemic is huge, and continues to be felt in Indonesia and everywhere else in the world. While it tested our economic resilience and adaptability, it also awoken our entrepreneurial spirit. We looked online for solutions when offline solutions were not available. People – individuals as well as small and medium sized enterprises – began selling more of their products and services online. Marketplace platforms like Tokopedia and Bukalapak saw an influx of not just buyers but sellers too – and some of these sellers were doing so well, they were taking up loans to expand their businesses. That's when many banks and financial services providers realised they could be be losing out as they couldn't offer loans to these potential customers simply because these prospects didn't have credit or bank history, and therefore couldn't be scored by traditional credit scoring means.


This may not be news to you: 92 million of Indonesians are unbanked, according to Temasek and Bain's e-Conomy report – that is, they don't have a bank account – ignoring their needs means businesses would pass up on an enormous opportunity. We are talking about 175 million Internet users, many of whom rely on online banking services. And the number will keep increasing because, thanks to digitisation, it has become easier to set up an online business. The barrier to entry has been lowered.


ADVANCE.AI understands Indonesia's needs


Working with some of the largest banks here in Indonesia and the biggest e-commerce platforms like Tokopedia and Bukalapak, as well as having strategic partnerships with credit bureaus and government bodies, has helped the ADVANCE.AI team understand this early on: alternative solutions elsewhere may well be the mainstream solutions here. To be able to serve Indonesia, it's key to understand the country's unique position and the population's habits including their digital habits.

"We understand that alternative solutions elsewhere may well be the mainstream solutions here in Indonesia."

When consumers apply for credit or loans, they typically get a score based on their banking activities, bank loan activities, etc., and the scores help determine if each application is successful. So while some verification tech and risk management companies here claimed to offer alternative credit scoring solutions, many haven't been able to cover data points that can help businesses and financial service providers properly score consumers – or doesn't have the coverage businesses needed. ADVANCE.AI's alternative credit scoring solution takes into consideration data points like telco scores, ecommerce data, address verification, income verification, etc. These alternative sources have helped ADVANCE.AI's customers in Indonesia and in markets where traditional credit scoring tools haven't been able quite helpful. Curious? Book a demo to see how our alternative credit scoring solution works.


Shift to e-money and other digital payments


This digital shift is also apparent in payments, especially when Indonesia has been a cash-dominant society. One of the first things we noticed is the huge reduction in the number of ATM machines across the country. Digital payments now encompass more than just bank transfers as Indonesians transition from cash to payment methods like QR payments, e-money and e-wallet payments. At many restaurants, diners can scan QR code menus at the table, order their food and pay via their smartphones. Even at your traditional mom-and-pop shops, QR code payments are now available and shoppers would instinctively whip out their mobile phones to pay for their groceries.


ADVANCE.AI is working with several banks in Indonesia to enable these digital payments, from launching e-money apps to extending their financial services online. Our seamless and secure eKYC process helps verify consumers and the required documents including the Kartu Tanda Penduduk (KTP) identification cards. As a global provider, the ADVANCE.AI platform provides worldwide coverage of 200+ countries with support for multiple major documents including ID cards, passports, driving licences, residence permits, etc. Our extensive database also gives businesses over 99% accuracy on our face recognition and ID optical character recognition (OCR) solutions.

"The ADVANCE.AI platform provides worldwide coverage of 200+ countries with support for multiple major documents including ID cards, passports, driving licences, residence permits, etc." 

Another interesting transformation: bank branches. Larger banks in Indonesia are starting to introduce digital branches. Unlike the traditional branch with a big lobby, bank tellers and a floor full of service staff, each digital branch has one to three customer relations officers on duty and most of the offerings are self-service. Video banking is also available at digital branches and Indonesians have become accustomed to video verification either using their own mobile devices or using machines at digital branches. It's quite common for us to pop into a digital branch and use these self-service kiosks or start a video verification in a booth.


Moving forward with digitisation in Indonesia


Digitisation will be the way forward for Indonesia. From the private sector to government bodies, processes are starting to get streamlined and digitised. One example is the digitisation of the insurance industry. Indonesia's Financial Services Authority (Otoritas Jasa Keuangan or OJK) is phasing out paper documentation, and regulating the eKYC process for new and existing customers implementing mandatory data such as ID and KTP card verification. Further down the road, we foresee this process being provided by certified verification providers only. ADVANCE.AI works closely with OJK and various agencies to ensure our solution is always compliant and up-to-date. Businesses need to consider a long-term verification tech and risk management partner that's dependable, not only for stability but also for cost efficiency as constant switching of partners can be a big drain of resource.


This digital transformation isn't just top-down. Besides increased digital activity from e-commerce, transportation and the various services consumers access on a daily basis, Indonesians have also been curious about the offerings of new digital banks that recently entered the market. Rather than choosing between traditional banks and these challenger banks, consumers enjoy the best of both worlds – whether it's taking advantage of higher interest rates for their savings or getting acquainted with innovative financial products and services. ADVANCE.AI has partnered with a few of these digital banks in their launch campaigns, providing smooth and secure eKYC and onboarding processes – in mid May this year, we onboarded over 1 million customers in 3 days for a bank!


It's key to choose a reliable verification and risk management partner like ADVANCE.AI as high traffic should be expected especially when there are promotions. With secure and fast onboarding, consumers can then quickly get started in a frictionless and enjoyable banking experience.


Ultimately, that's really what we want to drive and we are excited to help enable these experiences in Indonesia and around the world. I'd love to share on ADVANCE.AI's solution that's best suited for your business, so be sure contact us.


You may also book a demo with our team to learn more.


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