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n Indonesia, Asia’s third most populated country, only around a third of the population is connected to a formal financial services institution. It’s thus no surprise that the Indonesian government wants to more than double that percentage, connecting 75 percent of the population to a form of bank by 2019.

President Joko “Jokowi” Widodo has introduced a national strategy to promote financial services through education, public funding facilities, supportive regulations and consumer protection.

As Indonesia strives to bank the unbanked, digitalization is one way to achieve financial inclusion in the country. Considering that the country has a majority young and technologically savvy population, projected to reach 168 million by 2020, and that the number of internet users is also expected to rise by 8 percent by 2020, digital transformation would be a good approach to tackle the banking gap.

According to the 2018 PwC Indonesian Banking Survey, technology continues to drive business transformation with a focus on front-end customer platforms. However, changing customer needs is a strong second priority, with banks keeping an eye on digital branches and fintech disruption.

The emergence of new technologies such as artificial intelligence (AI), cloud and blockchain provides real opportunities for Indonesia to bank its unbanked population.

In a country where apps such as Go-Jek reign supreme, established banks need to leverage these technologies to bring simplicity and accessibility to their offerings. For instance, cloud and blockchain can allow retail banks’ mobile apps to provide banking services quickly and with minimal exposure.

Embedding AI into the fabric of customer service also allows traditional banks to differentiate their services from the emerging players by providing a superior interaction. In the world of digital branches, video services for know-your-customer (KYC) combined with blockchain authentication will make banking anywhere truly possible, without the need for a physical location.

Our involvement with banking customers in Indonesia has been made possible thanks to the recent opening up of banking regulations allowing video-based authentication (commonly referred to as KYC in banking circles). The top three banks have quickly used our video technology to extend their services to non-staffed or to minimally-staffed branches. One large bank has embedded our video technology into their virtual tellers, allowing visual interaction between customers and agents as soon as the customer picks up the phone. This means that non-staffed branches can provide comfortable access to bank staff, or minimally staffed branches can provide more expert access.

Financial institutions find that providing standard banking services to the masses is not enough to compete. What many organizations are discovering is that in a sea of easily copied products and services, customer experience is emerging as a competitive differentiator. According to Avaya and IDC research, consumers’ top three criteria when deciding whom to do business with include high quality of service, ease of finding products and timely delivery. In other words, bringing banking to the masses alone is not enough, it needs to be delivered based on customers’ expectations.

If they’re going to deliver exceptional customer service, where can financial institutions start their journey? Other than the fundamentals (investing in omnichannel customer service, defining customer-centric enterprise metrics), there are new technologies that have the potential to change how we think about customer service.

AI, for example, could provide banks with the ability to better understand their customers, provide personalized services and create more efficient experiences. Despite the current hype around AI replacing humans, we believe the more immediate impact of AI will be realized by weaving it into the fabric of customer interactions.

For example, AI can be used to identify which channel to best service the customer, or instantly provide live agents with real-time resolutions to customer queries, such as which product fits the customer best. This will ultimately increase customer loyalty by delivering the top three factors to attract and maintain loyal customers. As it matures, AI will play a major role in creating seamless, consistent, and personalized customer experiences for banks and their customers across multiple digital touchpoints including the mobile app, website and chatbots.

The banking and finance industry in Indonesia is key to helping the government reach, and even exceed, its target of financial inclusion for 75 percent of its population. Many of the challenges in making banking accessible to the masses, as well as tailored to the needs of an increasingly informed and engaged customer base, can be overcome with the deliberate and thoughtful application of digital technologies. Now is the time for Indonesia and its financial services sector to address the customer demands and ensure greater financial inclusion.
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