Go-Jek Sparks an Indonesian Banking Revolution

Go-Jek Sparks an Indonesian Banking Revolution

Wawan Suwandi opened his first bank account nine months ago when he became a motorbike taxi driver for Go-Jek, the Indonesian ride-hailing company.

"Before that, I had never felt a need to have a bank account," said Suwandi, in his early 30s, who works from his hometown Tangerang, a Jakarta suburb.

Go-Jek helped Suwandi open the account, allowing him to receive direct electronic payments from customers who use the company's mobile wallet, Go-Pay.

"Some drivers may still rather receive their pay in cash, but I think only those too lazy to learn new things. Go-Pay makes [transactions] easier."

Goek App. Image: Tribunnews
Goek App. Image: Tribunnews


Besides enjoying the ease of banking with his smartphone, Suwandi says Go-Jek drivers with good performance ratings can take advantage of other perks. Several banks offer Go-Jek drivers the chance to take out a mortgage or save for hajj pilgrimages.

"I'm new at Go-Jek, but I hope soon I'll be entitled to [such benefits], too."

Suwandi is one of the millions of Indonesians who have recently opened a bank account for the first time thanks to new economy companies like Go-Jek.

Rapid smartphone adoption and easy-to-use e-payment apps are penetrating Indonesia's vast unbanked population on a scale that the country's traditional banking industry has never been able to achieve.

Image: Nikkei Asian Review
Image: Nikkei Asian Review


This is good news for Indonesians -- and their country's economy.

The World Bank views access to financial services as a "critical step" toward reducing poverty and inequality.

"Financial inclusion allows people to save for family needs, borrow to support a business or build a cushion against an emergency," World Bank Group President Jim Yong Kim said in April.

In April 2016, Go-Jek ventured into financial technology with the launch of Go-Pay. The convenience of paying and tipping drivers with an e-wallet created a large, growing user base: half of Go-Jek's 100 million monthly transactions are processed through Go-Pay.

Rapid mobile and smartphone penetration is opening up new opportunities for digital companies in Indonesia. Image: Akira Kodaka/Nikkei Asian Review
Rapid mobile and smartphone penetration is opening up new opportunities for digital companies in Indonesia. Image: Akira Kodaka/Nikkei Asian Review


The growth of the fintech industry is expected to boost Indonesia's economy over the long term and speed its transition to upper middle-income status. But along the way it could also shake up the country's banking industry.

"We think over the long term fintech companies will take some share of banks' businesses, either in existing or potential segments that could have been grabbed by banks," Morgan Stanley says.

A report by PwC Indonesia in July says a majority of Indonesian bankers surveyed felt threatened by Go-Pay and Alibaba's Alipay.

Image: Nikkei Asian Review
Image: Nikkei Asian Review


Meanwhile, Some banks are already benefiting from partnerships with digital companies. Bank CIMB Niaga has acquired 940,000 new customers by opening up new accounts for Go-Jek and Grab drivers -- most of whom were previously unbanked.

Lani Darmawan, director for consumer banking at CIMB Niaga, said it processes 2 million transactions a month from the drivers.

"We see Go-Pay as a bridge for the unbanked to reach a formal financial sector. For some of our partners -- drivers and merchants -- partnering with us is their first step towards the formal financial sector," Go-Pay chief executive Aldi Haryopratomo said in an email to Nikkei.

"We're also planning to partner more intensively with established financial institutions," he added.



Source : This is part of a story originally published in Nikkei Asian Review

Indah Gilang Pusparani

Indah is a researcher at Badan Perencanaan Pembangunan Penelitian dan Pengembangan Daerah Kota Cirebon (Regional Development Planning and Research Agency of Cirebon Municipality). She covers More international relations, tourism, and startups in Southeast Asia region and beyond. Indah graduated from MSc Development Administration and Planning from University College London, United Kingdom in 2015. She finished bachelor degree from International Relations from University of Indonesia in 2014, with two exchange programs in Political Science at National University of Singapore and New Media in Journalism at Ball State University, USA. She was awarded Diplomacy Award at Harvard World Model United Nations and named as Indonesian Gifted Researcher by Australian National University. She is Researcher at Regional Planning Board in Cirebon, West Java. She previously worked as Editor in Bening Communication, the Commonwealth Parliament Association UK, and diplomacy consulting firm Best Delegate LLC in USA. Less
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