Closing the Financial Inclusion Gap
Tony Blair Institute for Global Change
Working with political leaders to drive change 🌍
Welcome to Institute Insights, where TBI experts bring to life our work enabling political leaders to drive change that transforms lives.
In this edition, Senior Manager Willy Limiady shares insights from TBI’s new Financial Inclusion Mapping Study, launched with the Gates Foundation and Indonesia’s Coordinating Ministry for Economic Affairs at the inaugural Indonesia International Financial Inclusion Summit. This 85-page report maps where – and why – people still lack access to essential financial services such as bank accounts, credit and digital payments. Blending analysis with practical policy guidance, it offers a data-driven roadmap to help the government close the financial inclusion gap and ensure no one is left behind as Indonesia advances steadily towards high-income status. The full study is available here – in Bahasa Indonesia.
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Mapping Indonesia’s Financial Inclusion Gap
A Life Without Savings Is One Without Progress
Imagine living without a bank account. No savings for emergencies, no access to loans to grow a small business or support your family, and no secure place to keep your earnings. For millions of Indonesians, this is not just a hypothetical situation – it’s their daily reality.
Only 76.3 per cent of Indonesia’s adult population owns a bank account, meaning the rest have to rely on relatives and friends to access financing services. Due to data gaps, there is no exact and verified number for the unbanked population, but it is estimated to be in the tens of millions.
With the country aspiring to reach high-income and developed status in 15 years, any delay in financial access could jeopardise that goal.
Financial inclusion goes beyond access to banking services; it’s key to reducing inequality, building entrepreneurship and promoting sustainable economic growth. It also empowers individuals and businesses – especially those businesses owned by or serving marginalised groups – to benefit from that growth.
Indonesia’s Progress and Its Remaining Challenges
Indonesia has made progress in expanding financial access. More adults now have bank accounts, and financial literacy has improved to 65 per cent – equipping more Indonesians with the knowledge needed to manage their finances responsibly.
But Indonesia’s size and geography pose major connectivity challenges. As the world’s largest archipelagic country, its more than 17,000 islands span three different time zones. This creates major infrastructure barriers in remote areas, where low internet penetration and limited transport networks make it difficult for communities to access formal banking services.
Marginalised groups – such as women entrepreneurs, people with disabilities, rural communities and the elderly – are often the most affected. For example, only about 27 per cent of small and medium-sized enterprises (SMEs) owned by women receive financing from formal institutions, which limits their ability to grow and create jobs. Approximately 78 per cent of the 20 million Indonesians with disabilities lack access to formal financial services, highlighting a significant inclusivity gap. And rural areas, while making progress, still trail urban centres, with a financial inclusion rate of 84.8 per cent versus 91.5 per cent in cities.
Indonesia’s evolving financial landscape also adds to the challenges, as digital products and services develop rapidly and can outpace regulatory efforts designed to keep consumers safe. For example, the booming online lending platforms – commonly known as pinjol – have exposed consumer-safety risks. These include both fully legal services and those unregistered platforms that operate without transparency.
While the absence of lengthy credit checks by these platforms can improve access to financing for marginalised groups, the lure of “easy and fast money” has also led to a rise in non-performing loans. As of early this year, Indonesia recorded more than 80 trillion Indonesian rupiah (IDR) in outstanding debts – a 29 per cent year-over-year increase. This figure underscores the need for government action to mitigate the growing risk of unsustainable lending.
In parallel, the prevalence of illegal pinjol platforms – those operating without registration or consumer safeguards – calls for greater consumer protection. By 2024, more than 15,000 people had fallen into debt through unregulated platforms.
Closing the gap for marginalised communities – the so-called “last mile” of financial inclusion – is essential to make sure that no one is left behind as Indonesia advances towards its development goals. Doing so requires targeted, data-driven action.
That’s why TBI has recently launched the Financial Inclusion Mapping Study – a joint initiative with the Gates Foundation and Indonesia’s Coordinating Ministry for Economic Affairs. This 85-page report offers policymakers and financial-sector actors a clear, data-driven roadmap to reach underserved communities.
Conducted over the course of six months, the study takes a dual approach. On the demand side, it outlines strategies to directly reach vulnerable groups. On the supply side, it recommends innovations to develop financial products tailored to those groups’ needs.
This approach is designed to also help realise President Prabowo Subianto’s priority of universal bank-account ownership, in line with both national law and the Presidential Regulation on financial-sector development and financial inclusion.
The study identifies five core pillars to accelerate inclusion: build a digital financial ecosystem that works for everyone, expand access to business financing, improve financial literacy and consumer awareness, strengthen consumer protections, and transform how social assistance is distributed. These pillars serve as a strategic framework for future reforms and investments.
How the Study Will Be Used
The Indonesian government sees this study as a vital tool to realise its vision of an inclusive economy. By pinpointing policy gaps and operational challenges, the study will guide reforms and investments aimed at reaching marginalised groups. Its insights will support the development of scalable, sustainable programmes aligned with President Prabowo’s ambition for Indonesia to become a high-income country.
This initiative exemplifies TBI’s broader mission to support inclusive economic transformation through digital public infrastructure, data-driven policymaking and institutional reform. Alongside this study, TBI is also working with another ministry to deploy innovative technology at scale in support of the Indonesian government’s social-assistance programme – ensuring public services reach those who need them most.
The launch of the Financial Inclusion Mapping Study marks another step forward in Indonesia’s transformation, supporting the country’s pursuit of achieving high-income status while leaving no one behind.
Experts in Action
Delivering Public Services Using Technology
AI and Machine-Learning Panel
TBI Policy Advisor Oliver Large will speak at Public Sector Executive’s flagship virtual conference about how artificial intelligence and machine learning can enhance public-service delivery. The panel will explore how new technologies can increase efficiency while preserving the vital human element in government services. Fellow speakers include representatives from Cambridgeshire County Council, West Berkshire Council and the Tech Industry Forum.
📅 Thursday 17 July | ⏰ 10:35am to 11:05am (BST) | 📍Online
Reimagine Productivity
Maximising Efficiency via New Ways of Working
TBI Director of Government Innovation Policy Alexander Iosad will speak on a cross-sector panel exploring how to unlock productivity through innovation in work practices and public-service delivery. Joining him are representatives from the Department for Science, Innovation and Technology, the Ministry of Defence, the NHS Innovation Accelerator, and Birmingham City Council.
📅 Wednesday 16 July | ⏰ 3pm to 4pm (BST) | 📍30 Euston Square, London NW1 2FB
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This is a step in the right direction and we will use this approach to help guide our global #BeMedigitalinclusion initiatives to close the financial and digital inclusion Gap. Thanks Tony Blair Institute for Global Change
President and Managing Director of OCS Indonesia | Board Members of BritCham Indonesia | Co-Chair AmCham Indonesia | Brands Builder | Strategic Transformation Enthusiast | Biopsychosocial Expert | IFMA Member
2moThis is a timely and well-researched report 👍 but beyond identifying underserved communities, we also need to examine the deeper issue of systemic trust gaps. Financial inclusion isn’t just about infrastructure or innovation; it is about dignity. People don’t avoid banks solely due to geography or literacy. They avoid them because they don’t feel seen. Let’s complement this data roadmap with human-centered design, where listening is just as strategic as lending. Trust, especially in rural and marginalized communities, is the real last mile. If we get that right, financial inclusion can evolve from access to actual empowerment. Ian Leonard Betts
Education in ICT, Info Tech and Management Consultant at TIM TECHNOLOGY SERVICES LIMITED and an Author.
2moThank you for sharing.
Asesor General (Chief Adviser) / Coordinador Técnico de la Superintendencia de Bancos de la República Dominicana
2moXiomy Elizabeth Ramírez Nin Ines PAEZ Yulianna Ramon Maria Mercedes Marte Arlene De Frias