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10/7/2022 12:00 AM
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Digital Financial Inclusion Driving Economic Growth By Muhammad Adisurya Pratama


The coronavirus disease (Covid-19) pandemic changed the pattern of financial transactions carried out by most people, including the use of digital-based payment systems and access to mobile banking.  This is because the use of digital-based payment systems can help break the chain of Covid-19 transmission (Allam, 2020). ​​

Changes in the pattern of financial transactions are also inextricably linked to technological advancement, such as the advent and proliferation of the smartphone.  Using the latest technology, supported by a fast and reliable internet connection, it is easier than ever for users to explore the online world. 

Data from the Indonesian Association of Internet Service Providers (APJII) revealed that approximately 210 million of the 272 million total population in Indonesia already had internet access in 2021.  A survey conducted by APJII found that 79% of respondents used the internet for online transactions, while 72% accessed financial services. 

Concerning the digital economy in Southeast Asia, the latest e-Conomy SEA 2022 report published by Google in conjunction with Temasek and Bain & Co pointed to digital economic growth in various sectors, including digital financial services. 

Digital financial services in Indonesia have increased significantly, with long-term growth achieved in terms of cashless payments, investment, digital insurance, Buy Now, Pay Later products, and money transfers. 

Cashless payments are expected to reach USD266 billion in 2022, up 13% on the previous year in terms of gross transaction value.  In fact, cashless payments in 2025 are predicted to grow 17% to USD421 billion.  Cashless payments include the use of credit cards, debit cards, prepaid cards, electronic wallets and inter account transfers. 

In the insurance industry, digital insurance is leading growth of digital financial services, reaching 64% (yoy).  Google, Temasek and Bain & Co project digital insurance to reach USD400 million in 2022 and expand to USD1 billion by 2025. 

Buy Now, Pay Later financial services have also experienced solid 66% (yoy) growth and are projected to reach USD5 billion in 2022.  In 2025, Buy Now, Pay Later financial services are expected to reach USD16 billion, with a CAGR of 51%. Finally, money transfers increased 34% in 2022 to USD2 billion, which are predicted to grow 26% in 2025 to USD3 billion. 

The data show that digital financial inclusion provides space for innovation in many sectors, including the financial sector from digital banking, insurance and financial technology (FinTech).  Unlocking public access to various financial products has grown exponentially. 

The Covid-19 pandemic and technological development have provided space to increase digital financial inclusion in Indonesia. 

According to Lyman and Lauer (2015), digital financial inclusion provides public access to formal services for the unbanked and underbanked through the use of digital technology, such as smartphones.

​A Bank Indonesia report published in 2019 also found that the payment system in Indonesia will support integration between money in circulation, monetary policy, financial system stability and digital-based financial inclusion by 2025. 

How does digital financial inclusion affect economic growth?  Several authors have explored how digital financial inclusion can contribute to economic growth. Based on a sample of 52 developing economies, research by Khera et al. (2021) found that digital financial inclusion, supported by access to infrastructure, financial and digital literacy, and quality institutions, can boost economic growth.  In addition, research by Liu (2021) concluded that digital financial inclusion has increased economic growth in China, which could improve further if supported by the development of more capable internet infrastructure. 

The positive effects of digital financial inclusion are also supported by the research of Ozturk and Ullah (2022) using a sample of 42 members of the One Belt Road Initiative (OBRI), including Indonesia.  In addition, Tay, Tai and Tan (2022) also found that developing economies, particularly emerging Asia, support and nurture digital financial inclusion as a form of poverty alleviation. 

It can be concluded, therefore, that digital financial conclusion contributes to economic growth. Which strategies could be implemented in Indonesia to ensure digital financial inclusion helps drive economic growth? 

First, unlocking public access to digital-based financial products and transactions based on existing technology.  Increasing public access would help the financial sector raise funds, which could be re-channelled to finance productive sectors, such as the agricultural sector.

Second, the development and utilisation of technological advancements to create innovation and various financial products.  Existing technology could be used to develop innovations that unlock public access to the financial sector, such as digital banking and FinTech with a focus on consumer needs, such as financing, opening accounts and investment.  Third, increasing digital financial education and literacy. The topics of digital financial education should include financial products, digital payment methods and quick tips for managing household finances.  


Allam, Z. (2020). The forceful reevaluation of cash-based transactions by COVID-19 and its opportunities to transition to cashless systems in digital urban networks. In Allam Z (Eds.), Surveying the Covid-19 pandemic and its implication (pp. 107-117). Amsterdam: Elsevier.

Bank Indonesia (2019). Indonesia payment system blueprint 2025 – Bank Indonesia: Navigating the national payment systems in digital era. Jakarta: Bank Indonesia.

Khera, P., Ng., S., Ogawa, S., & Sahay, R. (2021). Is digital financial inclusion unlocking growth? IMF Working Paper WP/21/167.

Liu, Y., Luan, L., Wu, W., Zhang, Z., & Hsu, Y. (2021). Can digital financial inclusion promote China's economic growth? International Review of Financial Analysis, 78, 101889.

Ozturk, I., & Ullah, S. (2022). Does digital financial inclusion matter for economic growth and environmental sustainability in OBRI economies? An empirical analysis. Resources, Conservation & Recycling, 185, 106489.

Tay, L.Y., Tai, H.T., & Tan, G.S. (2022). Digital financial inclusion: A gateway to sustainable development. Heliyon, 8, e09766.


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Halaman ini terakhir diperbarui 11/25/2022 11:02 AM
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