Driving financial inclusion with tech
As we see signs of a gradual emergence from the Covid-19 pandemic, there is growing hope that a recovery is imminent and cautious optimism is gaining momentum. Asia’s tech sector, which has weathered the storm remarkably well as more industries digitize across the region, is well positioned to ride a wave of rapid expansion as economies restart their engines.
The successful listing of Indonesian unicorn GoTo on the Indonesian Stock Exchange was a welcome shot in the arm for the archipelago’s US$70 billion digital market. The initial public offering (IPO) of the hailing-to-payments and ecommerce leader was also a boost to the mood of investors. As the world’s fifth-largest IPO this year, GoTo was seen as a watershed moment for Indonesia’s economy, where record venture funding has generated a wave of innovative new companies, including superapp Grab, ecommerce giants Bukalapak and Sea, and travel booking site Traveloka.
Tech unicorn IPOs are always exciting, with wild rides common as the new companies settle into their growth tempo, but the GoTo listing is special because the company is empowering financial inclusion by letting its drivers own part of the company. In a move that signals the group’s intention to drive prosperity for all Indonesians, the company allocated shares to 600,000 of its drivers, allowing a whole new group of unlikely investors to benefit from the company’s success.
GoTo was formed after last year’s merger of Indonesian ride-hailing and payments company Gojek, and ecommerce leader Tokopedia. These two businesses cover millions of small and mid-sized businesses (SMBs) across Indonesia and include 14 million merchants, 2.5 million drivers, and 55 million annual users. These epic numbers make this contribution to economic growth so important that Indonesia’s president Joko Widodo joined the listing event in New York via video call, where he voiced hope that the IPO would energise the country’s economic progress.
A seat at the table for all workers
Ride hailing and transport apps have already brought new sources of income to the lower to middle income populations across Asia, but this invitation to a table usually reserved for institutional and financially savvy investors is a sign of things to come as new wealth is nurtured using technology.
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Retail investing apps have flourished as more people globally are able to access financial services on their smart mobile devices, and this will further accelerate financial inclusion as more people profit from a financial system that was until very recently members-only.
Rapid Growth
Asia’s economies are growing at a pace that far outstrips many other regions. Indonesia’s annual growth is above 5 per cent, and is expected to continue to gain momentum as the country recovers from the Covid-19 crisis. And as more Indonesians improve their economic standing, the prosperity snowballs. People in the informal employment sector find steady jobs with ride-hailing apps riding, driving, delivering, or even selling their wares on mobile apps that are inclusive and easy to use.
Financial inclusion in Indonesia is also being driven by cloud-based financial apps, including ewallets like GoPay and LinkAja, which are used to make payments and deliver timely government aid to struggling citizens. Meanwhile, Amazon Web Services (AWS) customer PT Bank Commonwealth is providing financial services and helping Indonesians better manage their finances and achieve their financial goals with innovative services, including the SmartWealth app, which brings investing services to anyone with a mobile device.
Indonesia’s 800,000 digital-ready SMBs are also driving inclusion with cloud technology. Built in collaboration with AWS, Gojek’s Pojok Usaha platform simplifies technology adoption for Indonesian SMBs by enabling them to easily purchase AWS cloud services, and other technology services from Gojek and both companies’ technology partners. Through the platform, the two companies aim to help over 10,000 Indonesian SMBs achieve economic growth in their first year by establishing their businesses in the cloud, growing their online presence, and unlocking new efficiencies and revenue opportunities through the use of technology.
Regional Inclusion
Another rapid-growth economy in our region to watch is the Philippines, which is growing at around 6 per cent annually and is likely to see further innovation-led growth as banks across the country’s more than 7,000 islands start to use cloud technology to provide access to underbanked customers. Last year, up to 70 per cent of the Philippines’ 110 million citizens were living without access to financial services. To bring these services to millions more people, UnionBank, one of the country’s top banks, is creating new digital banking experiences accessible with mobile devices. These include bank transfers and money withdrawals, even in very remote areas.
Vietnam is also seeing surging growth, with 5% expansion just in the first quarter of this year, and 7 per cent annual growth pre-pandemic. At levels like this, the number of newly affluent people needing financial services mounts rapidly. The country’s Techcombank has a vision to “change banking, change lives” and is facilitating the rapid development of innovative new products and services that help Vietnamese individuals, businesses, and corporations grow using cloud services.
Unsurprisingly, India is growing quickly too, with an expected 7.4 per cent surge in its gross domestic product (GDP) this year. While two thirds of adults are not yet included in the country’s digital finance ecosystem, financial inclusion on the sprawling subcontinent is steadily increasing. Axis Bank, India’s third largest private sector bank, selected AWS to accelerate its digital transformation program to bring advanced banking experiences to more customers, including online accounts that can be opened in under six minutes and instant digital payments, using cloud technology.
GoTo’s success, along with that of other tech companies in Asia, is emblematic of a region that is poised for the kind of growth that includes everyone. That these companies are driving financial inclusion as they grow is heartening, and the way they are innovating with cloud technology to achieve this is inspiring. Strong economic incentives to serve the underbanked may exist, but the big picture here is that finally, a large section of underserved citizens will be able to play the game with the same rules for all.
The writer is managing director, APJ at Amazon Web Services.
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