Indonesian state-owned lender and largest financial institution in the country by assets Bank Rakyat Indonesia (BRI) has poured USD 1 million into its digital store platform Indonesia Mall, the firm announced on Monday.
Indonesia Mall was established by BRI in 2018 to empower local micro, small, and medium-sized enterprises (MSMEs) to go online to sell their products. The platform also helps MSMEs to sell overseas through a cooperation with several e-commerce players like Tokopedia, Bukalapak, Shopee, Blanja, BliBli, Singapore’s Qoo10, and others.
“Many MSMEs have limited access to the formal financial sector, with large swaths of the population still remaining unbanked. This, in turn, prevents them from even considering taking the sales process online. For example, if you don’t have a bank account, it becomes nearly impossible to collect payments online,” said BRI’s digital and IT director Indra Utoyo in the press release.
Currently, BRI says that it has over 10,000 registered MSME members in the platform, and aims to add 20,000 more affiliates by 2020. On average, members boosted their revenues by 40% only in 2018, according to BRI, which charges fees from saving accounts fees, loans, and transactions.
MSMEs employ over 97% of Indonesia’s national workforce, or about 116.7 million people. Still, only about 15% of MSMEs have proper access to financing, according to data from Indonesia’s Central Statistics Agency, as mentioned by BRI’s press release.
Meanwhile, Indonesian e-commerce is growing at an annual average rate of 16.3% to IDR 238 trillion (USD 16.6 billion) in 2019, according to GlobalData. The growth is expected to spike by 2023, with the industry value predicted to hit IDR 436 trillion (USD 30.3 billion), reflecting an increase of nearly 85%.
“If the majority of the country’s MSMEs will participate in e-commerce activities, their effect on the industry would be staggering,” Utoyo added.
BRI is aggressively transforming itself to become a digital bank. It has collaborated with over 75 digital industry players, including fintech lending and e-commerce companies. As part of its strategy to go digital, BRI is targeting two new segments: ultra-micro businesses and the millennials, Utoyo said in an interview with KrASIA.