financial education in indonesia

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FINANCIAL EDUCATION IN INDONESIAEXPERIENCES & EVALUATION

Banking Research and Regulation Directorate

2012


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Facts About Access to Finance inIndonesia and the Importance ofFinancial Education

Bank Indonesias Commitment onFinancial Education

Financial Education Experiences inIndonesia

Evaluation: Key Challenges and Success

Outline 2

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4


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High income

OECD and non-

OECD

92%

Central Asia &Eastern

Europe

50%

East Asia &

Pacific

42%South Asia

22%

Middle East &

North Africa

42%

Sub-Saharan

Africa

12%Latin America and

Caribbean

40%

Source : Worldbank, Global Financial Inclusion Index 2011

INDONESIA 19.6%

MALAYSIA 66.7%

PHILIPINA 26.5%

THAILAND 77.7%

VIETNAM 21.4%

INDIA 35.2%

CHINA 63.8%

RUSIA 48.2%BRAZIL 55.9%

INDONESIA

20%

Indonesia dibawah

rata-rata.

Only 20% of adults have account at a formal

financial institutions

Access to Finance Indonesia


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Source: World Bank, 2010

83 % served

52 % served by formal institutions

61 % served

52 % served by formal institutions17 % underserved 39 % underserved

NATIONALLOW-INCOME

HOUSEHOLDS

Access to Finance for Poor

Low-income households get fewer services than others. Low-income household is also usually correlated with low level of education.

Bank Other formal informal Underserved Bank Other formal informal Underserved


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CREDIT SAVING

60 % served

40 % underserved

68 % served

32 % underserved

Bank Semi-formal informal Dont borrow

Cant borrow

Bank Other formal informal Dont save

Credit and Saving in Indonesia

60 % adults in Indonesia have access to

credit. But, most of them comes from

informal institutions.

68 % adults in Indonesia have access to

saving, most of them served by banks


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1

3

4

17

29

45

0 10 20 30 40 50

Long duration

Others

Insurance product is expensive

Don't need Insurance

Have no knowledge about

product

Don't have money

%

Why Indonesian don't have insurance?


Micro-insurance in Indonesia

Only 24 % Indonesian have insurance

29 % Indonesian did not have insurance because they dont

have knowledge about insurance products.


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0

10

20

30

40

50

60

70

Indonesia Lower middle income East Asia & Pacific (developing

only)

Access to FInance by Level of Education (in %)

Account at a formal

financial institution,

primary education or

less (% age 15+)

Account at a formalfinancial institution,

secondary education

or more (% age 15+)

EDUCATION BOOST ACCESS TO FINANCE

Higher level of education means higher awareness to use financial products.

Since there are lack of knowledge and awareness to use financial products , financialliteracy becomes important and can only be acquired using financial education.



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Outline 9

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Stabilitas Sistem Keuangan

Pilar 6

Pilar 1 Pilar 2 Pilar 3 Pilar 4 Pilar 5 Pilar 6

Robust

Consumer

Protection

Sound, strong, and efficient banking system

to create financial system stability for promotion of national

economic growth

Sound

Banking

Structure

Effective

RegulationSystem

Effective andIndependentSupervisory

System

Strong

BankingIndustry

Adequate

Infrastructure

FINANCIAL STABILITY FRAMEWORK

Financial

Education is apart of Pillar 6

of Indonesian

Banking

Architenture

Financial Education on Indonesian Banking Architecture

Increasing

Financial

Education

Incresing Financial Literacy :

- Able to manage their financial better.

- Protect from engaging in unfair practices

of financial institutions.

- Self confidence to engage in financial

activities.

Increasing

customer

protection

Creating stability

in banking sector

Relationship between consumer protection and financial education


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Consumer

protection and

financial education

Financial Educationto students andmigrant workers

Financial Planning

Saving Champaign

Financial LiteracySurvey

Financial Eligibility

Financial

Identity

Number

Intermediary

Facility

Start-up

Credit

Scheme

Distribution

Channel

Branchless

Banking

Supporting

Regulation

National

Strategy for

Financial

Inclusion

Branchless

BankingRegulation

Financial Education is also a part of Pillar 1 of Financial Inclusion

Pillar of Financial Inclusion


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Policy and

Regulation

of Financial

Inclusion

Improve Financial

Literacy

Improve PublicAcess

Financial Education Transparency on

characteristics of FinancialProduct & Services;

Robust consumer protection

Creating a credible database of

unbanked individuals: Financial

Identity Database

Promoting banking intermediary to

microfinance as a step stone to the

unbanked

Aims Of Policy and Regulation Towards Financial Inclusion


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Outline 13

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2007 : Issuance of Blueprint for Public Education in Banking

Establishment of working group on public education in banking toimplement the blueprint2008 BI campaign programs on financial education: Ayo ke Bank (2008)2009 BI campaign programs on financial education: 3P = Whatever the

product, Remember 3 Ps : Ensure Benefits, Understand the risk,Consider Costs

2010 Launching of Indonesia Saving Campaign and basic saving

product: TabunganKu2011 Integration of financial education in elementary and junior high school

curriculum (pilot project)

Extension of information access (enhancement of BIs website withconsumer education and information)

Financial Education for Migrant worker

Financialeducation

program forchildren and

youth

BIs Financial Education Program

PROGRAM


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National Campaign in Banking Education 15

(LETS GO TO BANK)

Introduce banks products & services with its characteristics (benefits, risks,

charges, rights & obligations) as part of financial education

promote intermediary function of banks

PURPOSES


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Integrated National Campaign Channels

in Banking Education16

Ayo ke Bank!

Public ServiceTV Commercial

Public Relation

Promotion

Websites

Signage

Uniform

Art Show Branches

Radio

Education Car

Visits ATM

News Paper

Brochures

Posters(Lets Go toThe Bank!)

Above The Line Below The Line


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National Campaign Slogan of Banking Education Program 17

"Whatever the product, Remember

3 Ps : Ensure Benefits, Understand

Risks, Consider Costs

to educate people to understand the benefits, risks, fees and rights andobligations before the customer decides to use banking products

to eliminate asymmetric information between customers and banking.

PURPOSES


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Indonesia Savings Movement 18

To increase the marginal propensity to save in Indonesia

To increase domestic funding To build saving culture of Indonesian peoples

Indonesia Saving Movement was launched on February 20th

2010 by the President

PURPOSES


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TabunganKu

No monthly administration Fee

Low initial deposit (only Rp20.000/USD 1,8 for commercial banks andRp10.000/ / USD 0.9 for rural banks)

Low interest rate

TabunganKu CarTabunganKu CarTabunganKu CarTabunganKu Car

One of service channel is TabunganKuCars. These car operates in some placesas center of public crowd such as schools,markets, office buildings, residential

areas, etc It was funded by banking industry

Main featuresMain featuresMain featuresMain features

Numbers of account Value (Rp Million)

2,667,897.00 2,778,576.29

Achievement ofTabunganKu

As per August 2012 :

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48 kinds of brochureconcerning 6 topics

Banking institution

Customer complaintand mediation

Saving and

investation Loan

Banking services;and

Other informations,including Tips toaddress the global

financial situation

information can be seen on Bank

Indonesias website and members ofbanking education working groupswebsite

BrochuresBrochuresBrochuresBrochures

WebsitesWebsitesWebsitesWebsitesEducationEducationEducationEducation CarCarCarCar(MOBED)(MOBED)(MOBED)(MOBED)

MOBED gives education through books andinternet facilities which is available in car.

MOBED visits some places as center of publiccrowd such as schools, markets, housing

complex, office buildings, etc. MOBED is conducted in Jakarta & surrounding

areas, as well as in other 6 major cities(Medan, Bandung, Semarang, Surabaya,Denpasar & Makassar)

Channels of Banking Education Champaign


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Preparing the academic paper

Preparing the integration and teaching strategy

of financial education in Social Science Subject.

Preparing the monitoring instrument

Preparing financial education module in

extracurricular activities.

Introducing the program in 6 provinces aspilot

project

Introducing 72 school aspilot project(first step)

Workshop on financial education module and

Training of Trainers

Financial education program in academic

year 2011-2012

Monitoring activities:

Monitoring the implementation in the

schools partner and observe the level of

financial literacy level for students.

Steps:a. Interviews

b. Questionnaire;.

c. Observation.

Next agenda:

a. Revision of the material

b. Involving local banks participation in

extra curriculum activities

c. Expanding school partner forpilot

project.

Implementation of Financial Education

for Elementary&Junior High School Students


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Financial Education to Migrant Workers 22

1 MIGRANT WORKERSCANDIDATE

2

3

Departure fee:- Saving

- Banks Credit

- Saving

- Remittance

- Credit payment

WORKING OVERSEAS

BACK TOINDONESIA

Small Business Loan of

Indonesian Migrant

WorkersEnterprises

Small Business Loan

Indonesia

Successful Migrant

Workers

Subject of financial educationto migrant workers


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Outline 23

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Key Challenges 24

Creative method to deliver material due difference in level

of education of target audiences

Enhance the Coordination among related institutions

to have a structured and continuous program

Budget sharing among institutions

Sutainability of campaign

Challenges


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Challenges on National Strategy for Financial Education 25

Coordination among institutions is the main problem. It takes more

than a year to established The National Strategy for Financial

Inclusion, in which financial education become part of it.

Implementation of financial education for banking sector has been

referring to The Blue Print on Public Education in Banking.However, there are problems on coordination & budget sharing

among institutions.

Review would be needed in near term to address challenges and

obstacles in implementing financial education.

DESIGN

IMPLEMENTATION

REVIEW

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3


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Key Success

Key success factors in implementing publiceducation in banking are:

Build the sense of ownership

Establish the commitment

Gain the endorsement

Create a single theme for a certain period

Sustainable improvements

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Building Strategic Network Among Related Institutions

Coordination by Joint Program with other stakeholders such as Ministry of

National Education, Ministry of Internal Affairs, Ministry of Cooperatives and SMEs,

Ministry of Social Affairs is needed to expand financial access.

facilitate and build a

conducive situation forfinancial institutions to

carry out their duties as

intermediary institutions as

well as facilitating financial

education

To do intermediaryfunction. To accelerate the processof educational activities

that directly touch the

major problems

Financial Authorities Financial Institutions NGO

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THANK YOU

financial education in indonesia

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