After some adjustment to life in Indonesia, I'm happy to say that we are now testing our product. Servers were delivered and installed, and the application is running. So I figure I'll take time to explain the business and why it's important for not only me. but potentially millions of Indonesians.
We are launching the first inter-operable mobile banking venture in Indonesia. Mobile banking gets a lot of attention today because of some success stories in other emerging markets like Kenya (mPesa) and the Philippines (G-Cash). But first let me explain the mobile banking concept. In its most basic form, your cell phone becomes your debit card. At a point of sale, you can put cash on your phone and take cash out of your phone. The customer is also able to pay bills and buy products online. More than typical debit card features, the customer is also able to send money via text message to another user. Your phone, in essence, becomes your bank account and our company wants to provide these services to Indonesia.
So why Indonesia? First off, this country has been the best kept secret over the last decade for investment opportunities. Venture capitalist are quick to seed companies in the Asian giants like China or India and also don't mind the smaller success stories like Hong Kong, South Korea, and Singapore, but Indonesia has been consistently overlooked. There has been a bit of buzz here lately since Yahoo! recently acquired a local company, but it is by far the largest untapped market in the region and probably the world.
Secondly, Indonesia is a monster market on any level. It has a population of 240 million, of which half are under the age of 29. Their population ranks them number four in the world after the US. Over the last decade, Indonesia has grown at a healthy 5% to 6% and weathered the economic crisis incredibly well. Outside of simple macro data, Indonesia provides the perfect spot to execute a mobile banking venture. Some 140 million of Indonesians have no bank account and they literally store cash in mattresses. Less than 5% of the population has a credit card and therefore 99% of all financial transactions are in cash.
Not sold yet? Indonesians also speak one language with a Latin alphabet. The population is largely literate and have access to a basic education. Compare this to India, where there are 20 plus languages with multiple alphabets or China with a pictorial alphabet and numerous dialects. The technology works on any phone by sms command, so there is no need to download an application or have a fancy smart phone.
And finally, a mobile banking product solves a lot of problems here. All dot coms are dying for an online payment tool. In order to buy something online, you need to make a bank transfer including bank address, bank code, and account number - an extremely painful process. The unbanked population cannot buy anything online. These people will also have a safe way to store their money and send their money to family for little cost.
The mobile bank mPesa in Kenya became the largest bank within two years. If this venture has a fraction of that success, it will become an important partner company for Indonesia, expand the buying power for the domestic market, and empower the unbanked population.
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