A refreshing innovation–The Sinar Sip from Bank Sinar, part of the largest banking group in Indonesia

Bank Sinar is a part of Bank Mandiri Group and as part of Indonesia’s move towards financial inclusion Bank Sinar worked with IFC and other partners to carry out a branchless banking pilot. Today we are joined from beautiful Bali by Pak Alit Asmara Jaya who shares his expert thoughts on banking the unbanked using mobile phones: where the challenges lie and what his hopes are for mobile banking in Indonesia in 2015 and beyond.


Pak Alit, thanks for your time today. We are greatly interested in understanding the branchless banking experience in Indonesia, and your experience in launching the branchless banking pilot. For context, could you please give us a bit of background about Bank Sinar?


Bank Sinar is currently majority owned by Bank Mandiri, a state owned enterprise. It has been in operation since 1970, having originated as a peoples’ credit bank. In 2004 we obtained a licence as a conventional bank and then in May 2008 the bank became a subsidiary of Bank Mandiri, the largest banking group in Indonesia. 

The bank focuses on financing micro and small businesses and entrepreneurs. As of August 2014, our portfolio consists of over 80% of micro and small loans, with the rest being loans to medium enterprises.

The bank only operates in Bali for now, with 86 branches and 7 cash outlets. In terms of size, we have nearly USD 110 million in total assets and USD 78 million in total loans.

Our vision is to become the main challenger in financing micro and small business in Bali. Our mission is threefold: Firstly to develop the product and services as per market and customer needs, secondly to grow and develop Bank Sinar in a healthy and sustained manner and thirdly to support the professional growth of our employees.


Please could you describe the needs of the market and why you embarked on a mobile money/branchless banking pilot?


Indonesia has a population of 250 million, being the fifth most populous country in the world. However at present only 60 million people have bank accounts. The rest must depend on informal financial services. In Bali, an estimated 49% of working adults do not have bank accounts. 

We embarked on the pilot with the following main purposes:

  • To renew our commitment to the micro segment and add to our customer base by tapping the unbanked  segment
  • To  differentiate our services in a highly competitive market
  • To serve our existing customers, as the additional services keep  them loyal to Bank Sinar 
  • Over the long term to increase our loan portfolio as savings accounts increase

As a bank, our core business is credit and the main goal of our Branchless Banking service is to provide basic savings and credit products.




Please describe the pilot itself. How many people were involved? What services were offered and how?




We started the project in March 2010 and launched in November 2012, but still without agents because the central bank was still in the process of formulating regulations for Branchless Banking.

At the beginning of June 2013, we started the pilot with agents based on the guidance from our Central Bank. We had 10 agents in 3 districts. Their core business is to run grocery stores and sell mobile phones and airtime top-up. The pilot ended in November 2013 as per guidance. Our project was in partnership with IFC and Axis was our Telco partner.

Our core team consisted of 10 people and was supported by other departments including branch, accounting, finance, operations, legal and compliance teams.

spanduk uplk


The services were of three major kinds:

  1. Saving accounts, including opening accounts at the agents, deposits, withdrawals, balance inquiry and P2P money transfer
  2. Payments, including payment of bills, mobile top up and merchant payment
  3. Other services included linking the account to conventional savings accounts




We used USSD technology with the phone number as the account number. A PIN is required for accessing stored funds and carrying out transactions. Once an account is opened at an agent, it is directly active but with limited transactions until full KYC and verification has been completed by Bank Sinar. Transactions are completed in less than 45 seconds. Completion of every transaction is notified by SMS.  

How did the pilot help, and what feedback did you receive?


We had a list of things to be tested and studied during our pilot. These included product positioning, speed of transaction, pricing/charging, fees paid to agents, agent incentives, customer education by agent, agent training and programs to register and activate customers.


8 Launching UPLK Sri Asih 28 Juni 2013


Of the lessons learnt from the pilot, some key ones include the following:

  • Consumers do have  a need to save after working hours and on holidays
  • The majority of customers who opened accounts at the agents were previously unbanked
  • We need more Telcos to join the service
  • Pricing was not an issue, in fact it was considered affordable
  • The majority of the transactions consisted of deposits
  • Agents who managed phone shops were able to more proactively sell products and they registered many more customers
  • There was a strong demand for more billers to join the service
  • Incentives for agents and customer worked well to increase transactions and accounts opened. 



What are some of the challenges you faced in making such a service successful?


Getting this service to be successful requires attention to a number of different aspects. Some of the areas we have been looking at include the following:

  • Telco coverage is still a challenge. Even the biggest Telco has some problems to cover the whole of Bali
  • A lot of consumer education is required to convince people that use of the service will benefit them. Cash is still very much king
  • We need to work with many more billers
  • We require the ecosystem to include many more merchants
  • It is hard to get agent commitment. Half of our registered agents were not able to make much progress in terms of registering accounts and encouraging transactions
  • So far regulation only allowed Banks with category book IV to have the service and the product is only for e-money, not saving as Bank Sinar requires to do
  • We would benefit from the involvement of the Central Bank and Government to help our campaign
  • The Government must support through their policy to distribute subsidiary payments through mobile money
  • Renewed long term commitment and budget from management

What are your hopes for 2015?

Our partnership with Bank Mandiri with the co-branding model using the e-money product of Mandiri will continue. We are in the process of preparing for it. The model will be the same with the name Sinar Sip but powered by Bank Mandiri. The service will be e-money phone-based service with the use of agents. Bank Mandiri has a licence to go for branchless banking based on e-money. So far this is allowed by regulation.

At present OJK (The new Financial Service Authority of Indonesia) is drafting branchless banking regulations based on basic savings account product and hopefully will release it this December. Bank Sinar looks forward to having our own branchless banking service. We can then reposition the Sinar Sip e-money into the Sinar Sip savings product. This would allow us to pursue our initial plan of outreach to the unbanked for increasing our savings customer base and micro loan portfolio.


I GN Alit Asmara Jaya is currently Managing Director of Bank Sinar, which is the micro-banking institution in Bali and a part of Bank Mandiri Group, the biggest banking group in Indonesia. Having worked in the industry for over 30 years, his wide experience includes operations, risk management, credit, export import, accounting and finance and branchless banking for the last 3 years. He is in charge of the Branchless Banking project of Bank Sinar.


Why don’t we let our youth manage bank accounts?

In my recent interview of Brian Richardson, co-founder of WIZZIT in South Africa, he asked a question: Why should a 16 year old be expected to look after a family, but not have access to a bank account?

I have been unable to forget that question – hence this post. I thought I should check with you – is it that we are underestimating both the capabilities and the needs of our youth, who must cope with the tremendous fallout of the world financial crisis (not of their making, I should add), and who are the architects of the world’s future.


Take what is happening in India, Indonesia, Vietnam and elsewhere in Asia. I was recently in some Asian countries to conduct research on the way people pay and was pretty amazed at what I saw. It is the youth who are leading trends in paying online. Who orders on Flipkart in India, to cover the needs of the whole family – for their grandparents and parents alike? Who buys pizzas from Domino Pizzas using their iPads? In fact, I found it was often the teenager in the household who was actually in charge of the families new payments card and trusted to buy on behalf of everyone. As they also manage the families Wi-Fi and are the most computer literate, little wonder this is the case.


This got me thinking. Was this just an emerging country phenomenon? Is it confined to urban areas? I’m concluding it is not. I see similar behaviour in households here in the UK. Across the world, and across income groups, there is a section of trusted young people who need access to financial services of all kinds, indeed it is fairly critical to consider their needs, not as exceptions but as well-designed, mainstream services.

Remember, a 50 year-old saw the Internet invented in their lifetime, as also mobile phones. Our kids on the other hand grow up taking these things for granted. As money goes digital, digital wallets and mobile phones offer new capabilities to design in checks and balances, while more effectively supporting what young people need.

So what would happen if we ignore this issue? Could we be driving the youth into the fast growing informal digital economy and could this create problems for the future? Unregulated digital financial services have little or no restrictions – surely using these would be worse, not better.


Business-savvy youngsters are not a new phenomenon, but the technology revolution of the past years has greatly empowered their ambitions. The recent BBC show Million Dollar Intern, which I much enjoyed, had Rich Martell, Gary Martin, Ross Bailey, Juliette Brindak, Suleman Sacranie and Fraser Doherty who run million dollar enterprises to go in and give some pointers to established, struggling businesses. Fraser Doherty started age 14 and made a million before the age of 20. Each of the others has a similarly inspiring story. Do we really feel that at age 16 these entrepreneurs were incapable of managing their own bank account?


You might argue that the million dollar interns are the exception and not the norm. Left to themselves youth may have less control over themselves than adults do. Or they may earn small amounts that are unprofitable for banks to support. Or they are not accountable for their actions. However many trends are creating valuable market segments: international students studying abroad, music and gaming users and more.


Today however, in the new branchless banking and mobile money scenarios there are ways to address each one of these concerns. Yet the new services invariably continue to have the same restrictions: You must be 18 and over to be entitled to use them.


In the absence of mainstream financial services a variety of prepaid cards are offered. However the cost and inconvenience (limits, difficulty of topping up), restrict their use as a way to manage business or household needs.

I believe this may be an idea whose time has come. Why don’t we investigate the great new features digital money services offer - Double sign off to protect youth from using illegal substances or falling for scams (though I may add, some adults may need to have a similar sign-off from a youngster as well!).


Similarly the retail industry needs to consider some changes. Secure certification systems and better universal and global standards for classification for products online can restrict purchase of certain products rather than remove capability to buy.


Just as there is a fortune at the bottom of the pyramid, there is a goldmine of the architects of tomorrow, waiting to climb the banking ladder – or a non-banking ladder. Our decisions and actions will determine which it will be.

What is Trade Based Money Laundering (TBML) and how it impacts India

Can India step up action on TBML? Considering the crying need for India to profitably export to support the needs of her vast population, cleaning up this area could be a huge win but involves a fine balancing act.

The Reserve Bank of India (RBI) has just been notified by the Directorate of Revenue Intelligence (DRI) of a high incidence of Trade-based money laundering (TBML) being used by Indians to get remittances into accounts in Hong Kong.

With the change of government in India, I hope we will hear more about this shortly and so thought it worth reflecting a little on TBML and where it fits within overall Money laundering (ML) scenarios.

TBML is defined by FATF as the process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimise their illicit origins. While a lot of attention was on use of the financial system and cash movement, TBML received little attention until in 2006 FATF announced results of their Trade Based Money Laundering study.

They found that global trade in goods and services exceeded US $11 trillion a year. This offers fertile ground for tax evasion. By over or under-invoicing imports and exports, companies and their affiliates in low-tax and high-tax jurisdictions use tailored transfer prices to shift company profits and thus reduce worldwide tax payments. Some of this also represents capital flight, where currency restrictions are circumvented by pricing of imports and exports.

However while these two practices may involve legitimate funds, TBML is even more concerning, as it involves proceeds of crime.

It took 6 years more for the Asia/Pacific Group on Money Laundering (APG) to bring out their report, that investigated why so few cases of TBML were being detected in spite of expectedly serious incidence in the region.

Most customs agencies inspect less than 5% of cargo shipments entering or leaving their jurisdictions. Further, they tend to monitor exports less than imports. Consequently under-invoicing exports is a classic TBML ploy. What DRI would have detected would include cases of Indian exporters shipping a higher value of goods and services, with part payment received in India, and the balance deposited into a bank account, in this case in Hong Kong.

Money-laundering (ML) is typically carried out in three stages. Firstly, in the Placement stage, ‘dirty’ cash is placed into the financial system. Multiple smurfs (individuals or businesses) are used to repay loans, manage gambling scenarios, smuggle currency and blend funds into legitimate business.

Secondly, in the Layering stage, an attempt is made to move funds electronically, often between countries, in an attempt to obscure the source and links to the original misdeeds that are associated with the funds.

Thirdly, in the Integration stage the criminal receives possession of the funds from apparently legitimate sources. This could be done by buying property, cars, paintings and other high-valued items.

The cases that were highlighted in the FATF and APG surveys illustrate how placement, layering and integration take place through TBML. Case 7, a particularly complex one provided by India involved multiple ways in which trade was misused, with Dubai-based Indian national “A” laundering funds for drug cartels in Asia and South America.


FIGURE: A Case Study provided by India in the 2012 APG Report illustrates a complex case of TBML

Mr A established companies such as A1, A2 and A3 spread across Europe, Asia, Africa and USA. In Dubai Letters of Credit (LCs) were opened by these companies for importers such as I1, I2 and I3 in Dubai. Beneficiaries of the LCs were exporters such as E1, E2 and E3. By creating LCs for amounts much higher than the value of the goods, drug money lying with A was remitted to India. All that remained then was to integrate  the funds – Exporters E1, E2 and E3 kept the price of the goods and transferred the surplus to R1, R2 and R3, family members of A in different parts of the world.

This case study helps in visualising the kinds of cases DRI must have highlighted to RBI. Considering the crying need for India to profitably export to support the needs of her vast population, cleaning up this area could be a huge win but involves a fine balancing act.  Export has already been a highly controlled area for more years than I can remember. This already dissuades genuine small exporters. So I believe this is likely to be more a case of appropriate action than awareness. I look forward to more on this announcement, sooner rather than later.

The Digital Money Game– a multi-trillion dollar industry emerges



I have great pleasure in announcing the launch of my new book, The Digital Money Game. I describe the multi-trillion dollar emerging industry I term “Digital Money” from the perspective of very many different industries. It is not just meant for payment experts in large organisations, but for anyone who wants to understand how people pay, and how this is changing in each part of the world.


The penetration of mobile phones and smartphones is transforming the way in which consumers interact with brands and greatly facilitates a move towards non-cash payments around the world. To play the game properly though, one needs to understand the changes in a much wider set of fundamentals - identity, security, authentication, regulations, technologies and more, so as to create appropriate vision that goes across channels, services and market segments. That way you have a more effective roadmap with respect to new entrants, and a better chance that what you plan now will still be relevant when your projects go live. I share more about why I wrote The Digital Money Game here.


The book is based on Shift Thought research in markets around the world, and my interviews with experts from all the different industries that now participate in payments and financial services. I did my first set of interviews in July 2011. Four years later, the wisdom that they, and countless others shared with me has helped to shape this book. This is the first book in The Digital Money Series and we are currently working on others in the series.

Since then I have learnt so much from so many conversations that unfortunately it is impossible to thank each one of you by name – I hope you will recognize your contributions when you read the book!


The book is designed to help you to spot opportunities and gain confidence and insights to channel your work in a way that benefits you, and the markets you serve. It addresses multiple functional areas and levels: Chief Executives, Technologists, Business Development, Market Development and Product Development executives from Banking, Cards, Money Transfer, Telecoms, Payments, Technology, Retail, and Venture Financing Industries.

The digital money approach described in this book can help you create products and services that are secure, convenient and empowering to a whole range of consumers and merchants, across a variety of channels. The goal is to create a shift in thinking – from merely addressing the new opportunity provided by mobile phones, to launching holistic services that build solid brands.


My book is available on Amazon stores around the world, priced in local currency and immediately accessible as an  Amazon Kindle download that works across Kindle for PC and a host of commonly used devices. In case it says “Pricing information not available” just look to the right of the screen to select the Amazon site in your country.

In the first 2 days that the book has been available I am delighted to say that it has already been bought from many countries around the world. Thank you so very much for your support and kind words.


Have you bought my book? I would love to have your feedback and can direct you to further resources that may be of interest. Do drop me a line at contact@shiftthought.com.