Indonesia’s microfinance industry is one of the biggest in the world with approximately 50,000 microfinance organizations serving a potential customer base of more than 40 million potential clients. However, approximately 52% of the clients are yet to access any banking services and almost half the people survive on less than US $2 per day.
One of the fundamental characteristics of Indonesia’s economy is self-employment. With more than 40 million individuals are self-employed in micro businesses but over 50% of them have no access to proper financial services. One of the major ways of alleviating poverty in such economic is through the utilization of microfinance systems, however it has not attained maximum capacity in Indonesia. The microfinance sector of Indonesia majorly comprises of small microfinance institutions (MFIs), serving less than 10,000 active customers via individual lending methods and secure their financing via customer savings. The MFI segment comprises an array of public and private institutions in the form of rural, commercial and cooperatives banking organizations.
In spite of this size, the Indonesian microfinance segment is faced with various threats. Considerable limitations constantly prevent these MFIs from growing and enhancing the standard of living of the poor people. One of the major obstacles is lack of enough funding. Owing to this, most of these MFIs are usually able to provide the most fundamental services. Also, most poor Indonesians cannot access the organized financial segment as they reside in underserved regions or are seen bearing excess risks for loans.
i. Product specific strategies
ii. Superior customer services.
iii. Major player in Indonesia’s MFI
iv. Strategic partnership
v. High level of goodwill due to strong reputation
vi. Financially stable
i. Small range of products
ii. Dependency on partnership limits bank’s innovations and proactive nature..
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