Halim Alamsyah: Bank Indonesia - improved efficiency through data
collection
Speech by Dr Halim Alamsyah, Deputy Governor of Bank Indonesia, in the Signing of
Cooperation Agreement between Bank Indonesia and the Ministry of Home Affairs of the
Republic of Indonesia, Jakarta, 23 February 2015.
* * *
The honorable,
• Directorate General of Population Affairs and Civil Registration Services of the
Ministry of Home Affairs, Mr. H. Irman,
• Heads/Officials in the Ministry of Home Affairs,
• Heads/Officials in the state ministries and institutions,
• Heads of Working Units in Bank Indonesia and Financial Services Authority
(OJK),
• Heads of financial institutions, association of financial institutions, and
Indonesia Consumers Organization (YLKI),
• Distinguished guests,
Assalamu'alaikum Wr. Wb,
Good morning and may God bless us all,
1. On this great occasion, let us praise God the Almighty for the blessings
bestowed upon us so that we can attend the "Signing of Cooperation
Agreement on Utilization of National Identity Numbers, Population Data, and
Electronic Resident's Identity Cards within the Scope of Duties of Bank
Indonesia".
2. This cooperation agreement signing is the follow-up to the Memorandum of
Understanding on Utilization of National Identity Numbers, Population Data, and
Electronic Resident's Identity Cards within the Scope of Duties of Bank Indonesia
signed by the Governor of Bank Indonesia and Minister of Home Affairs on
6 May 2013. This follow-up takes a relatively long time because in-depth
reviews of many aspects are necessary, including infrastructure preparation and
primarily the impacts of such utilization policy on Bank Indonesia and the financial
industry broadly.
3. The duties of Bank Indonesia in the fields of monetary, macroprudential, and
payment system require data and information as important elements in
formulating appropriate policies and decisions to maintain financial system
stability and ensure a reliable and smooth payment system. Such data and
information are gathered by Bank Indonesia from various sources through reports
and/or surveys of, among others, bank and non-bank financial institutions,
government institutions, the capital market, exporters, companies with external
debt exposure, and even households.
4. In relation thereto, Bank Indonesia strongly supports the application of National
Identity Numbers and electronic Resident's Identity Cards by the Ministry of
Home Affairs because the fundamental issue of population registration in
Indonesia is data singularity. The program conducted by the Ministry of Home
Affairs to digitize population data by biometric verification technology in the
forms of fingerprint recording and retina scanning to ensure one's singularity is a
very progressive step to address the issue.
5. In its development, the population data gathered and managed by the Ministry
of Home Affairs may have wider benefits, including the implementation of duties
of Bank Indonesia and even other relevant institutions. Some examples of the
population data benefits in the implementation of duties of BI and financial
institutions, particularly banks, are as follows:
a. First, to increase efficiency and effectiveness of services provided to
customers and the community in credit extension. As we all know,
Bank Indonesia is currently managing Debtor Information System (DIS)
which has gathered around 82 million debtors' data from bank and
nonbank financial institutions with more than 180 million credit facilities. The
DIS data is utilized by bank and non-bank financial institutions as one of
the main considerations in credit extension process to verify debtors'
identities, credit facilities extended by other financial institutions, payment
history, collateral, etc. Therefore, accuracy and singularity of debtors' data
are very important factors.
b. Second, to increase effectiveness of Bank Indonesia in conducting
assessments and designing more efficacious credit policies.
c. Third, to support banks to better understand and recognize customer
candidates as well as financial behavior in a more prompt and
accurate manner. Accordingly, banks are also expected to design cheap
credit extension patterns without any collateral for individuals or households
with sound financial behavior. We often call this financial inclusion program.
Ladies and gentlemen,
6. In many occasions, I often say that the Global Financial Inclusion Index data in
2011 recorded only around 20%1 of adult population in Indonesia who have
accounts with formal financial institutions; in other words, there are more than
135 million people with limited or no access to formal financial institutions
(commonly called unbanked people). Poor access by the community to formal
financial institutions becomes a national strategic issue considering the strong
correlation between expanded financial access and economic growth.
Therefore, financial inclusion has become the government's priority agenda as
specified in the National Financial Inclusion Strategy.
7. One of the causes of poor access of unbanked people to formal financial
institutions is asymmetric information. Generally, data of unbanked people is
difficult to obtain as preliminary data for customer potential analysis. For that
reason, information provision facilities are necessary, which allow adequate
mapping of unbanked people potential, so that formal financial institutions may
provide the required financial products and services. Starting from this identified
information requirement, one of the financial inclusion programs promoted by
Bank Indonesia is the Financial Identity Number (FIN).
8. FIN is a unique, inherent, lifetime, simple, transparent, and interoperable number
provided to the community, including unbanked people. The aim is to reduce
asymmetric information & risk premium, facilitate and increase financial
access of the community, and facilitate financial institutions to obtain
information on customer candidates/customers. For Bank Indonesia, FIN is
very useful to produce more structured database and information on people
receiving services from formal financial institutions. However, more importantly,
FIN will become one of the main data sources to make profiles (rating) of
accurate individual or household finance to facilitate banks in extending cheap
but quality credit package without any collateral.
9. BI has been developing FIN since 2012 by collecting information through a
baseline survey using secondary data and comprehensive survey by direct
interviews with respondents. BI is consistently improving FIN business model,
among others through information system development and database expansion
by formulating digital questionnaire concept, which, at the initial phase, will be
tried through Digital Financial Services agents. In this relation, the NIN
(e-Resident's Identity Card) database will be used to establish FIN data to allow
acceleration of data capturing process and avoid FIN data duplication,
thereby ensuring FIN data singularity of each person.
Ladies and gentlemen,
10. We are pleased that Bank Indonesia's policies and work programs to increase
public welfare, among others through electronification and financial inclusion, may
synergize with the Program for Population Data, National Identity Numbers, and
Electronic Resident's Identity Cards by the Ministry of Home Affairs, to give
greater benefits for the financial system in particular and Indonesian people in
general.
11. We believe this Cooperation Agreement signing is the first step for both
institutions, and further technical steps are definitely necessary to realize the
expected benefits.
12. To conclude, we would like to extend our highest appreciation and gratitude to
the Ministry of Home Affairs and all parties supporting the realization of this
Cooperation Agreement. May God the Almighty bless our sincere intention and
steps and bestow us with smooth implementation thereof.
Thank you. Wassalamualaikum wr. wb.