T

he International Finance Corporation (IFC) — the World Bank’s investment arm — and Bank Sinar Harapan Bali have asked the nation’s central bank to approve a “branchless banking” pilot project to expand banking services to underserved communities.

Matthew Gamser, who leads the IFC’s advisory work in the East Asia-Pacific region, said on Monday that Bank Sinar Harapan Bali, a subsidiary of Indonesia’s largest lender Bank Mandiri, would make arrangements with local agents to provide services in areas without banks.

“The experiment is how to increase coverage, make the banks closer and serve closer to the people using mobile phones as the vehicle,” he told a press briefing.

“A phone is like a wallet in your pocket. It’s only good if you can use the units there to pay for something or if you can turn [them] into cash if you need the cash. That’s where the agents come in.”

The pilot program will cover fund transfers and cell phone credit top-ups, which, according to Gamser, are the most popular financial activities.

“People will move into things like savings facilities over time as people get more comfortable with the new way of banking,” he added.

According to a recent report released by Bank Indonesia (BI), 62 percent of the nation’s households do not have bank accounts.

BI deputy governor Muliaman Hadad said that authorities have been pushing for programs to boost financial inclusion so people could better manage their personal finances and improve the quality of their lives.

Bank Mandiri president director Zulkifli Zaini said the banking industry needed to take advantage of Indonesia’s cellular phone boom, given that 150 million of the nation’s 240 million people owned cellular phones while only 50 million people had bank accounts.

“In the future, with the new technology initiatives, phone numbers will become bank account numbers. There will be fund transfers and deposits made by Indonesian citizens using cell phones,” he told The Jakarta Post in a recent interview.

IFC vice president Karin Finkelston said the IFC would educate both banks and consumers about branchless banking to avoid risks and ensure that staff knew “how to sell products reasonably and informatively”.

“We can take the time and risk to do this type of pilot project, not just so that we and our partners learn, but so that we can help the whole system,” Karin said.

“What we learn we can play back or share with BI, and they can put in place regulations that will allow branchless banking to grow and provide greater access to people.”

The IFC and Sinar Harapan Bali have secured approval from the central bank to conduct the pilot project.

The project, if approved and implemented, by banks across the archipelago, might double the number of people with bank accounts to 100 million people “in no time”, Zulkifli said.