10th August 2021: The dynamic experience of a branchless banking agent in Indonesia   

Branchless banking agents have been one of the main pillars of the Indonesian government’s effort to promote financial inclusion. As the COVID-19 pandemic rages on, Indonesian branchless banking agents continue to serve as a vital link, ensuring the delivery of social assistance to the last mile. The agents also bring banking services closer to people even as they limit direct visits to banks to prevent the spread of COVID-19.
Heri, one of our diarists from Indonesia, is a banking agent. He also owns a corner shop from which he sells mobile phone supplies, such as airtime vouchers and phone accessories.  He also works for an internet provider as a sales agent, covering the whole Temanggung regency.

Heri usually has 10 agent banking customers per month. The customers are mostly young men and women. In general, Heri’s customers come to him to pay for their transactions in e-commerce platforms, such as Shopee, Bukalapak, or Tokopedia. Money transfers are another prominent category of transactions that keeps Heri busy, worth on average around IDR 500,000 (~USD 34.58) per month. He usually charges IDR 5,000 (~USD 0.35) to IDR 10,000 (~USD 0.69) per transaction from his customers as administration fees. Heri usually deposits around IDR 2 million (~USD 138.31) to IDR 5 million (~USD 345.77) per month in his agent banking account to meet the needs of those transactions.

Meanwhile, cash-out transactions are rare. When they do happen, Heri takes money out of his shop revenue. When he runs out of cash, he has to take a 30-minute motorbike ride to the closest bank branch. Despite the limitations on mobility brought about by COVID-19, Heri observed no significant change in his agent banking business as his customers mainly come from his neighborhood.

The graph below shows Heri’s revenue and proportion of banking agent transactions toward his total revenue:

The graph below shows Heri’s revenue and proportion of banking agent transactions toward his total revenue:The proportion of Heri’s nominal cash-in transactions toward his total revenue ranges from 11% to 25% per month. The transactions dipped in March 2021, as Heri had to renovate his shop during the month.

At that time, the local administration began a roadwork project near Heri’s house, which gradually made it tougher for customers to reach his shop. He had to eventually move his shop to a location nearby. Yet during the move and subsequent renovation, he could not offer in-person transactions, including agent banking services. However, he could still promote his corner shop products on social media and deliver them directly to the customers.

In May 2021, during Idul Fitri, the number of agent banking transactions increased as people needed to pay for their purchases in online shops or transferred money to their relatives. As seen in the graph, Heri’s share of agent banking revenue reached an all-time high in May compared to the past six months.

During our conversation last April, Heri said he preferred to be a non-dedicated agent, which has allowed him to offer various services and work more flexibly while juggling other responsibilities. “Dedicated agents do not receive any additional benefit from the service provider. Also, if I become a dedicated agent, I have to fulfill bank targets each month. I want to do this business in a relaxed way,” he says.

The presence of branchless banking agents can drive a wider financial inclusion. The introduction of new use cases, the provision of support, and more diversified services from service providers shall encourage the existing banking agents to sustain and improve their business. 

Last Updated: August 10, 2021