James Henderson

Tech ecosystem can power financial inclusion progress in Indonesia

For a long time, financial literacy has developed progressively in Indonesia, evident by the country’s ranking as the world’s fourth-largest unbanked population.

But inclusion efforts have been gaining pace in recent years, accelerated by COVID-19 as arguably the biggest driver in digitally transforming the financial services sector.

According to the Financial Services Authority (OJK), the nation’s financial inclusion index rose to 85.10% in 2022, reporting a high single digit increase compared to 76.19% in 2019.

“But there is still more to be done,” cautioned Vira Widiyasari, Senior Vice President of Fintech and Payment at Tokopedia.

“As the ‘everything store’ platform, we consistently strive to enhance innovation to ensure our products can meet the needs of Indonesians even more completely.”

Vira Widiyasari (Tokopedia)

Therein lies the “huge potential” for market-leading players – chiefly those housed within the technology industry – to play an integral role in further increasing financial literacy and inclusion levels nationwide.

“We collaborate with partners ranging from banking institutions to financial technology companies to help expand access to inclusive financial products and services for communities across Indonesia,” Widiyasari added.

Operating as a technology giant with a leading marketplace in Indonesia, one of Tokopedia’s key innovations is embedded finance. This refers to the inclusion of financial products in a non-financial customer experience, journey or platform such as in an e-commerce experience.

“Embedded finance provides alternative entry points, reducing barriers to accessing various financial products and services, as well as streamlining payments through purchasing processes,” Widiyasari explained.

For example, in the past, consumers had to visit a physical bank branch to submit an application for a loan when they wanted to make any substantial purchases.

Today however, services such as Buy Now Pay Later (BNPL) are now more readily accessible for anyone with a smartphone or device through daily activities.

To accelerate local financial inclusion, embedded finance solutions span fintech, investment, lending and insurance products from various banking and fintech partners.

Several of these initiatives are the availability of cross-selling innovations with the GoTo ecosystem such as GoPay, GoPayLater, along with Tokopedia Card and Embedded Insurance.

An ecosystem approach to accelerating financial inclusion

Forming a key part of the GoTo ecosystem, Tokopedia aims to optimise the user experience and deliver new benefits to users by “continuously facilitating” the ease of online transactions.

Such an objective is also supported by insights gathered during the recent Ramadan festive period, where cashless payment methods were the most preferred when shopping on Tokopedia, inclusive of digital wallets, BNPL, bank transfers and credit or debit cards.

“Recognising the potential for cashless payment methods in Indonesia, we continue to collaborate with various strategic partners, including within the GoTo ecosystem, to provide a more convenient shopping experience for our users,” Widiyasari said.

One such is example is collaboration with GoTo Financial to enable the integration of GoPay digital payment and the GoPayLater BNPL method on Tokopedia. The approach complements other payment methods available while also increasing user options and convenience.

This is supported by the introduction of a renewed loyalty point system – GoPay Coins – to help users fulfil daily payment needs more affordably.

“Users who have activated their GoPay accounts on Tokopedia can earn GoPay Coins for their transactions,” Widiyasari shared.

Each GoPay Coin is equivalent to Rp1 and can be redeemed by users when they make purchases on Tokopedia or Gojek, combined with other payment methods.

“With GoPayLater, users can choose to split lump sum payments for Tokopedia purchases into monthly instalments over one, three, six to 12 months, with no hidden fees,” Widiyasari added. “With these flexible repayment schedules, users can easily pick their payment tenure as suitable to their current needs.”

Embedded BNPL solutions such as GoPayLater are designed to enhance accessibility for people just starting out and lacking sufficient financial or credit transaction records to access traditional bank loans.

From a technology standpoint, the solution has been deeply integrated within the GoTo ecosystem to create a more seamless shopping experience, enabling users to utilise this feature on both the Tokopedia and Gojek apps.

Vira Widiyasari (Tokopedia)

“We are committed to providing credit responsibly, using a data-driven understanding of users to ensure we provide a facility that accurately accounts for the individual’s circumstances,” Widiyasari said.

This is made possible through the utilisation of Semangat Digital Bangsa’s credit scoring service, Tokoscore.

The product provides credit scoring according to user spending behaviour on Tokopedia, validating their address as well as predicting their income to help lenders in their credit underwriting and risk management process.

Aside from BNPL, Tokopedia also offers more than 50 methods of payment to facilitate the ease of online transactions. One such method is Tokopedia Card, a co-branded credit card that was launched in mid-2022 as a collaboration between Tokopedia and Bank BRI.

“What makes it highly practical is that users can apply for and activate their Tokopedia Card, check transaction details, manage their credit card usage and billing history directly through the Tokopedia app,” Widiyasari explained. “This innovation makes credit card payment methods more inclusive and accessible for everyone, including the unbanked population.”

Transactions using Tokopedia Card increased by almost 1.5X in the fourth quarter of 2022 compared to the first three months after launch. The number of registered Tokopedia Card users also increased nearly 6X during March 2023, compared to the end of the first month.

Within this period, the new offering also contributed 20% of all credit card applications in Indonesia.

Collaboration key, collective effort required

By collaborating with various insurtech partners, Tokopedia also integrates a range of insurance products into a single platform.

The aim is to enable users to have a more relevant and specific level of coverage that caters to individual needs and product purchases through Tokopedia. For example, users that purchase electronic accessories products can also purchase an additional Total Damage Protection.

“We are committed to providing simple, easy and fast end-to-end claim experience,” Widiyasari said.

“Where users can easily submit claims from Tokopedia’s app, and track the whole approval process in-app as well. This increased the claim submission rate by almost 6.5X compared to before we enhanced the claim process further.”

In assessing the industry landscape, Widiyasari observed that insurance product usage has grown “significantly” across the country.

This is demonstrated by the number of overall transactions using insurance products which increased 2.5X in the first quarter of 2023 compared to the same quarter last year. Furthermore, transactions using Total Damage Protection throughout the first quarter of 2023 increased at a rate of 4X.

“Collective effort is critical in reducing the barriers to financial inclusion,” Widiyasari advised. “We believe that collaboration with all relevant stakeholders is pivotal to creating solutions that will not only benefit our buyers and sellers, but also all the larger Indonesian communities.”

As part of that effort, Tokopedia in collaboration with Bank Indonesia (BI) and the Financial Services Agency (OJK) launched the Financial Literacy Module in May 2023.

This module aims to increase financial literacy among the Indonesian population, one of which is through the adoption of Tokopedia’s embedded finance solutions to help improve their economic welfare.


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