Blog

As Digitalization Grows, Will Indonesia’s Agent Networks Survive?

Posted on by harshita

Indonesia is Southeast Asia’s largest digital economy, poised to reach $180 to $340 billion by 2030—by all measures a success story of rapid digital growth. Yet, even as digital transactions surge, Indonesia’s vast informal sector holds on to cash as a central aspect of daily life. Despite the expansion of digital payments, cash in circulation has more than doubled over the past decade to reach approximately $65 billion as of July 2025.

Agents move between the digital and cash economies

At the heart of this coexistence are millions of local agents who make the digital economy work for everyone. Many of them are small business owners who operate from kiosks and local shops called warungs, serving as trusted financial intermediaries that connect communities to banks, payments and other digital products that would otherwise remain out of reach.

As the number of bank branches and ATMs in the country has declined by 25% over the past five years, the number of agents has grown by about 40% annually over the past decade, according to MSC estimates. By 2025, there were more than 2 million registered agents nationwide. While only about one-third of agents remain consistently active, they form a cornerstone of Indonesia’s financial inclusion efforts, serving as the primary channel for FSPs to reach last-mile communities.

Global Findex 2025 data shows that only 30% of Indonesian adults conduct payments independently through self-service channels, such as mobile applications, cards or online platforms, indicating that most people still depend on assisted channels for financial transactions. This continued reliance is reflected in agents’ growing activity, as transaction values continue to increase. Between 2017 and 2023, cash-out transactions rose by 43% and the average transaction volume through agents grew five-fold.

However, as Indonesia’s digital economy grows, individual access to digital channels continues to deepen. Cellphones now reach 68% of the population, and 72% have internet access. Cashless transactions, particularly through Indonesia’s interoperable QR code payment system (QRIS), have been growing at a rate of more than 150% year-on-year. As more people begin to transact independently through mobile and internet banking, a critical question emerges: will agents remain relevant?

How are agents faring in other digital economies?

Globally, digital growth has yet to replace cash, and agents keep the two worlds connected. We see this even in the world’s largest and fastest-growing digital payment ecosystems, such as India and Kenya.

In Kenya, one of the global pioneers of mobile money, cash in circulation continued to climb by $2.6 billion in 2024, a 5.6% increase from the previous year. Meanwhile, agents facilitated mobile money transactions worth $67.3 billion in 2024, nearly double the level recorded in 2019.

In India, the Unified Payments Interface (UPI) – a real-time platform that enables instant fund transfers between bank accounts – has driven a surge in digital payments. UPI transaction volumes increased tenfold in just four years, from 12.5 billion in 2020 to 131 billion in 2024, to account for nearly 80% of all digital payments. At the same time, cash in circulation has more than doubled from $200 billion in November 2016 to reach $418 billion by September 2024, with SBI, India’s largest bank, channeling approximately 3.2 million transactions per day through its agent network.

These examples reveal that even in highly digitalized markets, assisted channels remain essential, suggesting that digital and agent ecosystems will coexist for years to come.

Agents in Indonesia adapt to a dual cash-digital system

Indonesia mirrors this global reality. The strength of its agent model lies in its adaptability to a dual cash-digital system. What began as a simple cash-in, cash-out function has gradually expanded in scope. While not all agents can offer advanced services, many have started to diversify and now sell digital products, offer loans and microinsurance, facilitate QRIS payments, and even serve as delivery or return points for e-commerce.

Traditionally, agents have been vital to enable government-to-person (G2P) transfers and ensure cash reaches low-income households efficiently. Building on this foundation, many agents are now becoming the frontline for financial service providers (FSPs) to deliver more specialized financial products, such as microloans, savings, and climate-risk insurance, helping strengthen rural economies and household resilience.

Agents’ adaptability has built both structural and economic resilience. Agents are not competing with Indonesia’s rapid digitalization; they are powering it. Rather than being displaced by fintechs and mobile banking apps, they form the human infrastructure that makes digital services accessible and trustworthy, especially in areas where cash use is prevalent and digital literacy is low.

Agents remain the bridge between digital systems and communities

The shift toward digital finance in Indonesia is well underway, but agents will remain the critical bridge that connects digital systems to communities. As the ecosystem matures, stakeholders in the ecosystem should now shift their focus from expanding agent coverage to strengthening their capabilities, which would enable them to manage more complex, higher-value transactions and provide greater value to customers.

Providers can support this evolution if they invest in advanced training, streamlined business processes, and data-driven, AI-enabled, tools for effective agent management. Even as technology transforms financial services, the human presence and local trust that agents bring will remain essential to ensuring that Indonesia’s digital finance is both inclusive and scalable. The future of finance is digital, anchored by the agents and their customers who make it work.

This was first published on 28th January 2026 by FinDev Gateway.

What PMJDY beneficiaries are really telling us beyond access

Posted on by harshita

The room held a quiet anticipation on a June morning in 2026. The Pradhan Mantri Jan Dhan Yojana (PMJDY) beneficiaries sat together, some glancing toward the door. They were waiting to meet someone they had never imagined they would encounter in person: a globally respected advocate for financial health.

Her Majesty Queen Máxima of the Netherlands, the UN Secretary-General’s Special Advocate for Financial Health (UNSGSA), had come to India to engage directly with beneficiaries of the Pradhan Mantri Jan Dhan Yojana (PMJDY). During the interaction, she sought to understand their experiences with formal financial services, including the challenges they face, their awareness and use of PMJDY-linked benefits, their ability to prepare for and manage financial emergencies, the financial shocks they commonly encounter, and the role that trusted banking touchpoints play in supporting their financial wellbeing.

India has opened more than 560 million bank accounts under the PMJDY. It stands as one of the most ambitious financial inclusion drives in the world.

Spend a little time with account holders, and the conversation quickly moves beyond account numbers. People talk aboutthe impact of emergencies on their finances They wonder whether insurance would really support them when it matters. Many say that saving feels harder than borrowing. Almost every group mentions one familiar figure in their community, the business correspondent (BC), who they simply call “our bank.”

These everyday realities shift the focus from financial access to financial health. They may shape the next phase of India’s financial inclusion journey.

The session: Bringing beneficiary voices into a global conversation

On 23rd June 2026, MSC (MicroSave Consulting) led a focus group discussion (FGD) with PMJDY beneficiaries during Her Majesty Queen Máxima’s UN-visit to India. She spoke directly with participants using real-time translation. The exchange felt rare and direct. It created space for honest voices from the ground to meet global advocacy. As the beneficiaries shared their stories, the conversation offered valuable insights into how access to formal financial services can strengthen resilience, improve financial security, and enhance everyday lives.

The findings are both encouraging and sobering. PMJDY has changed lives in visible ways. Yet, beneficiaries are clear that opening a bank account is only the first step.

A major takeaway from the session was that people’s understanding of financial products grows primarily through experience rather than education or outreach. A medical emergency increased awareness about insurance benefits. A financial shock prompted the use of the overdraft facility. Digital payments became important when they addressed an immediate and practical need.

This is an important signal for program design. Financial literacy efforts that are disconnected from lived experience may have a limited impact. Knowledge and action, it seems, often develops when relevance exists.

The insurance gap: Small amounts and big consequences

The PMJDY’s social insurance schemes cover life and accident risks and carry modest annual premiums, by design. Yet, participants described a recurring difficulty. They could not maintain sufficient account balances when those premiums fall due.

A participant noted, “The amount for the premium is small, but sometimes there is no money in the account when it is deducted.”

The issue is not a lack of willingness to pay. The problem is the mismatch between the timing of deductions and the availability of funds. It is a direct result of irregular, seasonal, and informal incomes that define the lives of many PMJDY beneficiaries. Insurance continuity, therefore, might be just as important as insurance coverage itself.

The savings gap: Easier to borrow than to save

Participants noted a shift from moneylenders to formal credit, particularly banks and self-help groups (SHGs). SHG loans have become a trusted and accessible source of emergency funding for health costs, household needs, and short-term cash needs. This is a notable achievement, but regular savings remained out of reach.

Another participant shared, “If there is a need, we can arrange a loan. Saving every month is more difficult.”

Access to credit and the ability to build financial resilience do not always develop together. A household that can borrow during a crisis is better positioned than one that cannot. However, a household that can save and handle a shock without taking on debt is in a fundamentally different position. The savings gap remains a significant and often overlooked challenge in financial inclusion and financial health.

The BC continues to be the face of the financial system

Perhaps the most striking theme in the discussion was the role of the BC. For many participants, the BC was not a service channel but represented the entire financial system, as several participants referred to their BC simply as “our bank.”

Beneficiaries reported how this single human touchpoint helped them open accounts, conduct transactions, understand products, access government benefits, and resolve issues.

As financial services become more digital, a common assumption holds that human intermediaries will become less important. However, the evidence from this session suggests otherwise. For many beneficiaries, trust still depends on personal relationships, local presence, and access to help when issues arise. In a growing digital ecosystem, the BC’s role might actually matter more.

The questions beneficiaries ask

Throughout the discussion, beneficiaries did not question whether they could access a bank account, as the question had already been answered. Instead, they asked more difficult questions, such as:

“Am I saving enough to handle an emergency?”

“Will my insurance still be there when I need it?”

“Can I use digital services confidently without fear of making a mistake?”

“Is there someone I can rely on if something goes wrong?”

“Can my household handle a financial shock?”

These questions reflect concerns about financial resilience, confidence, and well-being, as account ownership data alone cannot answer them.

The next chapter in financial health

India’s journey toward financial inclusion has effectively answered the key question of whether people can access formal financial services. The PMJDY’s response has been a clear yes.

When the discussion ended, the beneficiaries had not asked for more bank accounts. UNSGSA Queen Máxima came to listen, and what she heard was unfinished progress. India’s population, which had crossed the threshold of access, grapples with quieter questions of financial resilience. The beneficiaries did not need anyone to explain financial health. They described it themselves, in the gap between a premium due date and an empty account, and in the comfort of a BC. They offered a clearer map of where India’s financial inclusion journey goes next.

This blog is based on insights from FGD with PMJDY beneficiaries, convened by MSC during Her Majesty Queen Máxima of the Netherlands’ visit as UNSGSA to India. She was visiting in her capacity as the United Nations Secretary-General’s Special Advocate for Financial Health. MSC has been working on financial inclusion across emerging markets for more than 27 years.

Why Bihar and Uttar Pradesh are emerging as India’s new women enterprise credit hubs

Posted on by harshita

Between 60% and 70% of rural women nano-entrepreneurs now accept digital payments. This suggests that formal financial participation is no longer limited to a small group of borrowers, but is spreading across a broader base of women-led economic activity.

For years, finance for women in India followed a familiar map. Southern states built some of the country’s strongest ecosystems for women’s participation in formal finance through self-help groups, cooperative lending, and deeper integration with the banking system. As a result, discussions on women’s financial inclusion often looked south for examples of what worked. The map no longer looks the same.

The fastest growth in women’s enterprise credit now comes from Bihar and Uttar Pradesh. This development is significant, as it signals a rapid expansion of women-led enterprise activity. For years, the focus of women’s finance was access. While that challenge has not disappeared, it looks different today. Women’s credit penetration has risen from 19% in 2017 to 36% in 2025, and India now has 16 crore credit-active women borrowers. The latest data points to a new question. Where will the next phase of enterprise growth come from?

The numbers are difficult to ignore. Between 2022 and 2025, lending to women for business purposes grew the fastest in Bihar and Uttar Pradesh, with a CAGR of 59% and 42%, respectively, while the national commercial credit growth stood at 17%. These figures challenge long-held assumptions about where growth can likely come from.

Discussions on Bihar and Uttar Pradesh traditionally focused on bringing more women into the formal financial system. Today, they are among the fastest-growing markets for women’s enterprise lending. The change did not happen because Bihar and Uttar Pradesh replicated the southern model of financial inclusion. It happened because the barriers to formal finance changed.

For decades, several small businesses, especially women-owned, operated largely in cash and outside formal recordkeeping systems. A tailor, food vendor, or shop owner could earn a steady income and support their household without providing the documents that banks typically relied on to assess creditworthiness.

Without formal business records, credit histories, or significant assets in their own names, lenders struggled to evaluate borrowers. Banks, therefore, relied heavily on branch networks, field verification, and long-standing borrower relationships to assess risk.

Digital public infrastructure (DPI) fundamentally altered many of those constraints. Digital payments, Aadhaar-enabled onboarding, smartphones, and retail lending products made it easier for first-time borrowers to establish a financial footprint.

Transaction histories opened new ways for lenders to assess borrowers who previously remained outside formal finance. As a result, participation could expand without waiting for decades of branch-led institution-building.

The impact is visible in the profile of new borrowers. Gold loans remain the most popular entry-level product gateways into formal finance. These accounted for 23% of new-to-credit women borrowers in 2025, up from 16% in 2022. During the same period, women’s share among new-to-credit retail borrowers rose from 28% to 38%.

These trends suggest that many women now enter the formal financial system through smaller, more accessible credit products before they progress to larger borrowing relationships. As those entry points expanded, participation grew in markets that historically had lower levels of formal credit penetration.

Between 60% and 70% of rural women nano-entrepreneurs now accept digital payments. This suggests that formal financial participation is no longer limited to a small group of borrowers, but is spreading across a broader base of women-led economic activity. That success creates a new challenge: Rapid growth does not automatically translate into deeper financial participation. Nationally, 19% of active microfinance borrowers also hold an individual retail or commercial loan. Tamil Nadu stands at 27%, while Bihar and Uttar Pradesh remain below 12%.

The gap highlights an important distinction. Access brings borrowers into the formal financial system. The ability to graduate from first-time borrowing to larger productive credit determines whether they can move into larger credit products, expand businesses, and build assets over time.

This matters because the fastest-growing markets for women’s enterprise credit are not always the markets with the strongest pathways for credit progression. If the first phase of financial inclusion sought to bring women into the system, the next phase must help them advance within it.

The broader lesson is that the geography of women’s enterprise growth map is changing. The South remains home to some of India’s most mature financial ecosystems. Yet the fastest expansion in women’s enterprise credit is occurring in Bihar and Uttar Pradesh. Together, they account for 12% of India’s credit-active women business borrowers. The institutions that support that growth should evolve as quickly as the map itself.

India’s women’s credit story is entering a new phase. It is broader, deeper, and increasingly geography-agnostic. The South built the foundation, but states like Bihar and Uttar Pradesh, once considered laggards, are scaling it. The institutions must recognize this shift early and invest where the next generation of women borrowers, savers, and entrepreneurs is already emerging.

This was first published on 20th July 2026 by Financial Express.

Integrated GEDSI and green loan assessment for inclusive financing

Posted on by harshita

Women-owned micro, small, and medium enterprises (MSMEs), persons with disabilities, and green entrepreneurs continue to face barriers in accessing financial services in Indonesia. Many of these businesses are still assessed through conventional credit criteria, which may not fully reflect their business potential, risk profile, or contribution to inclusive and sustainable growth. 

This user guide is developed under the FinClude Green program, a collaboration between Terala Foundation and MSC (MicroSave Consulting) with support from KINETIK. This guide addresses this gap by providing a practical approach for financial ecosystem actors to conduct more inclusive initial loan assessments. It is also designed as a hands-on reference for institutions that seek to integrate gender equality, disability, and social inclusion (GEDSI), and green considerations into their financing practices. 

The guide presents an integrated GEDSI and green credit assessment approach that helps financial institutions better understand underserved customer segments and apply more context-sensitive lending decisions. It includes practical tools, checklists, and references to standard operating procedures. Together, these resources help institutions review their existing portfolios, identify customer needs, and assess loan applications through a more inclusive lens. 

The user guide combines GEDSI perspectives with green criteria. It helps financial institutions look beyond standard credit requirements and consider the broader conditions, needs, and opportunities of women-owned MSMEs, persons with disabilities, and green entrepreneurs. The guide offers a starting point to strengthen inclusive credit assessment practices. It also supports fairer, more accurate, and more sustainable financing decisions for underserved entrepreneurs in Indonesia.

Please find the Indonesian report here.

A practitioner’s framework to move beyond compliance in fisheries programs

Posted on by harshita

At a landing site on Lake Victoria, the day begins before sunrise. Boats return. Buyers gather. A quiet negotiation begins before the fish changes hands. Adhiambo, a teenage girl, stands at the edge. She waits for a trader who controls whether she can get fish to sell and earn enough to take food home. The rule stays unspoken yet understood. Access to fish depends on access to her body. Everyone present knows how the system works. 

This is the second blog in a two-part series. Blog 1 examined the structural drivers of safeguarding failure in fisheries communities. This blog outlines what programs must do differently.  

The vulnerability that development programs encounter in fisheries communities is embedded in market structures, community infrastructure, and the life cycles of the people those programs serve.  

Genuine safeguarding must, therefore, begin earlier, reach deeper into communities, and connect directly to program design rather than remain a compliance exercise. 

  1. Interventions must begin in schools rather than in workshops 

The single highest-leverage safeguarding investment a fisheries program can make is to keep girls in school and to influence what boys learn while they are there. 

Research in Siaya County, Kenya, has established a direct relationship between fishing activity and school dropout rates among girls. Once a girl leaves school, economic and sexual vulnerabilities increase rapidly. Programs should establish or contribute to scholarship pipelines that target children, particularly girls, in their areas of operation. This is safeguarding infrastructure and should be treated as core program design. 

Beyond retention, programs should partner with local schools to integrate age-appropriate education on body autonomy, consent, and healthy relationships into curricula. Programs must be codesigned with teachers and community leaders. Girls need to learn early that jaboya is not a market law but a power imbalance that can be named and refused. Boys must learn that exploiting a woman’s economic desperation constitutes abuse and not entitlement or negotiation. 

  1. Diversify economic options to reduce dependency and risk 

Jaboya does not persist because women lack awareness. It persists because, for many, the alternative is no fish and no income. When fishing is the only visible livelihood, fish scarcity becomes a total crisis, which deepens safeguarding risks. 

Programs can expose young people to realistic, lower-barrier alternatives through career talks and livelihood showcases. Sector-adjacent options, such as fish processing, cold-chain logistics, and boat repair, reduce dependency on the daily catch without abandoning the community’s economic identity.  

Digital opportunities deserve a place as well. Content creation and mobile commerce are accessible to any young person with a smartphone. MSC’s analysis of youth entrepreneurship consistently shows that combining economic opportunity with skills, mentorship, and market linkages is far more durable than access to finance alone. The goal is to keep communities in fishing while ensuring that it remains a safe choice rather than becoming a trap. 

  1. Build physical infrastructure as a core safeguarding feature

Blog 1 documented the WASH deficit at most landing sites. For women and girls, this entails a daily risk of protection rather than mere inconvenience. 

Organizations should treat investment in gender-segregated, lockable sanitation and bathing facilities as a core safeguarding expenditure. Where budgets do not allow direct investment, organizations should advocate with county governments, water authorities, and infrastructure donors to secure these facilities. Programs cannot credibly claim to protect women while leaving them exposed to menstruation without privacy. The physical environment forms part of the protection framework. 

  1. Build community-led protection systems that outlast the project

Formal reporting mechanisms, such as hotlines, safeguarding officers, and written complaint processes, frequently fail at landing sites. They are distant, often unknown, and mistrusted by communities with long experience of institutions that do not follow through. 

Programs should invest in community safeguarding champions. Trusted local individuals can receive concerns, provide first-line support, and escalate cases appropriately. Jaboya is sustained by demand, and efforts to change that demand must engage men and youth as community champions.  

Peer mentorship is equally important. Evidence from MSC’s gender-inclusive aquaculture work in India and from Nyamware Beach on Lake Victoria confirms this finding. When women gain control over productive assets, such as boats, savings groups, and processing infrastructure, they shift power dynamics more durably than training alone. A protection system succeeds only if it remains after the program team leaves.  

  1. Integrate psychosocial support to address existing harm and future risk 

Safeguarding frameworks must address existing harm as well as future risk. Frameworks that fail to do both remain incomplete by design. 

MSC’s work on meaningful financial inclusion for women has consistently shown that the physical, social, and psychological barriers women face cannot be addressed by economic programming alone. Psychosocial dimensions must be embedded into program design. 

Communities experience high levels of trauma where jaboya is normalized, housing offers no privacy, and economic precarity is constant.  

HEDSO’s mental health programming directly links the jaboya system to depression, anxiety, substance abuse, and suicidal tendencies among young women. A UNICEF-commissioned report by ODI and LVCT Health found that one in three adolescent girls aged 15 to 19 in Homa Bay County are mothers or pregnant, which is nearly twice the national average.  

Implementing organizations must identify available services and establish referral pathways before implementation begins.  

For instance, LVCT Health runs a toll-free youth counseling hotline that is available 24/7. HEDSO delivers community-based mental health support across the lake region, and Farm Africa’s YISA program targets jaboya prevention through women’s asset ownership and cage aquaculture.  

Mapping these services is necessary but insufficient, since most remain concentrated in county towns far from landing sites where risk is highest. 

Program mapping may reveal that the nearest gender-based violence (GBV) counseling service is 45 km from a primary landing site. Such findings indicate systemic gaps in service provision rather than isolated safeguarding challenges. Programs should document these gaps and use the evidence to inform donor reporting, engage county governments, and shape policy discussions. Program learning should support system-level change and should not remain confined to safeguarding documentation. 

Programs must also simultaneously advocate for decentralized outreach models, co-fund mobile or community-based psychosocial services where possible, and build first-aid psychosocial capacity into community champions. This ensures that some support exists at the landing site while longer referral chains are strengthened.  

A framework for practitioners 

The five interventions above extend beyond the scope of most safeguarding frameworks. Safeguarding and program design are not separate workstreams. The conditions that keep women and children safe in fisheries communities also enable economic empowerment programs to succeed. If safeguarding is to remain meaningful, it must address the conditions that make them vulnerable in the first place. 

Before we finalize any safeguarding plan, we must ask: 

  • Does our risk assessment name jaboya or equivalent transactional sex dynamics? 
  • Does our community mapping include children under 18 who are already active in the fisheries economy? 
  • Have we assessed WASH and housing infrastructure at our target landing sites, and do we have a response? 
  • Are any school partnerships and scholarship commitments written into program design? 
  • Do community champions include men and youth, and are they resourced to continue after project closure? 
  • Are psychosocial referral pathways identified and functional before implementation begins? 

Any negative answer indicates a need to redesign the program. 

Samaki hukunjwa angali mbichi. If the fish must be folded while fresh, safeguarding must begin while the fish is still fresh, in schools, in communities, and in the design rooms where programs are built. It is at these entry points that risk can be reduced before it hardens into harm, and risks the lives of Adhiambo and many like her.  

MSC works across financial inclusion, agriculture, fisheries, gender equality, and youth economic empowerment in more than 65 countries. Visit our library at www.microsave.net/library to explore fisheries finance work across Asia and Africa. The insights in this series are based on on-the-ground work with fishing communities.