T

he government'€™s joint effort with banking institutions to promote financial inclusion across the archipelago is facing a major hurdle as most people from low-income households are reluctant to let individual agents take care of their savings under the government-endorsed branchless banking program, a recent study has revealed.

The Financial Services Authority'€™s (OJK) branchless banking program, locally known as Laku Pandai, offers banking and financial services to all Indonesian citizens through the help of other parties, including individual and institutional agents, whose work is supported by cellphones and other IT facilities.

The program, which was launched in March last year, aims to help increase financial access in Indonesia, where only 20 percent of the country'€™s 250 million population have access to banks.

However, a study published by Jakarta-based Atma Jaya Catholic University in cooperation with Global Affairs Canada, found that only 33.75 percent of 400 low-income families surveyed said that they would entrust their money to individual agents, even though they actually represent one of eight participating banks, including Bank Rakyat Indonesia (BRI), Bank Mandiri, Bank Central Asia (BCA) and Bank Tabungan Pensiunan Nasional (BTPN). The study was carried out between July and August last year in four major cities: Medan, Yogyakarta, Surabaya and Makassar.

The study, however, found that most survey participants still had a high level of trust in the banks.

Atma Jaya business administration expert George M. Sirait, who was involved in the research, said the findings suggested that banks participating in the program must train their agents in certain communication strategies to increase the presence of the bank in the eyes of potential customers.

Wearing clothing bearing the bank'€™s logo could be one of the strategies, George said.

'€œStandardization of clothing and operating procedures of Laku Pandai agents is worth considering,'€ he said on Monday.

Although trust remains a concern, 78 percent of respondents said they believed that the Laku Pandai program would facilitate their financial transactions, with 76.3 percent interested in utilizing the program to finance daily operations, 73.8 percent for business expansion and 54 percent for consumption.

However, the study also found that only 61 percent of the respondents in the four big cities in Sumatra, Java and Sulawesi expressed an intention to save.

Due to their perceived consumptive behavior, the study suggested that the program should develop hybrid '€œBasic Savings Account'€ products, which would allow people to save and withdraw money daily, with the hope that it would change daily consumptive behavior into daily saving behavior.

Data from the OJK showed that, as of January, 24,865 agents from eight participating banks collected third-party funds worth Rp 41.3 billion (US$3.1 million) from 1.09 million new customers nationwide.

Separately, BRI director for business and small and medium enterprises Mohammad Irfan and BTPN deputy president director Ongky W. Dana said both lenders routinely held training sessions for their branchless banking agents, who often lived in the same neighborhood as customers and were officially certified representatives of the lenders.

'€œBranchless banking is a new thing, and it will take time for people to become accustomed to it, so I don'€™t think it'€™s a big issue. People'€™s learning curve will improve,'€ Irfan said.

OJK chairman Muliaman D. Hadad, meanwhile, said the agency had requested that banks involved in Laku Pandai improve their internal mechanism in recruitment and training of agents, so that they would maintain the reputation of the banks they represented.