Researching Complex Systems: Navigating around Inclusive Digital Finance

A talk by Anindya Fitriyanti and Rayi Harjani at Somia Conference Systems Thinking in Design on 8 Nov 2023 by Somia CX.

“For them, cash is king.” — Rayi Harjani

To continue from our compiled key takeaways from all our speakers in our event last Nov 2023. Here’s a more detailed sharing of our third speakers, Anindya Fitriyanti and Rayi Harjani.

Rayi Harjani (left) and Anindya Fitriyanti (right), design consultants from Somia CX.

Anin and Rayi, both experienced design consultants from Somia CX, began their talk by shedding light on the stark reality of financial inclusion within Indonesia: more than half of the Indonesian population does not have a financial account. Building upon that, an additional 26% of the population relies only on basic financial services. Taken together, this data translates to at least a hundred million Indonesian adults who are either unbanked or underbanked.

Indonesian Population’s Financial Statistics. Source: Extracted from Anindya Fitriyanti’s and Rayi Harjani’s presentation.

Rayi highlighted that increasing access to financial services (i.e. financial inclusion) can increase their opportunities to improve their livelihoods.

In search of a way to broaden financial access, Anin and Rayi have taken part in the Digital Financial Inclusion for All (also referred to as DiFi for All) project. Commissioned by The Bill & Melinda Gates Foundation to Somia CX, DiFi for All aims to discover the barriers faced by the unbanked and underbanked Indonesian population to onboard Digital Financial Services (DFS).

Collaboration with Stakeholders. Source: Extracted from Anindya Fitriyanti’s and Rayi Harjani’s presentation.

Over a two-year period, Anin and Rayi collaborated with a wide range of stakeholders, encompassing:

• Governments through representatives from 13 local government agencies or regulatory bodies,
• 36 service providers, including both field officers and those at strategic leadership levels,
• Financial institutions in the form of 4 key partners in banking and fintech.

Target Users Reached. Source: Extracted from Anindya Fitriyanti’s and Rayi Harjani’s presentation.

Furthermore, Anin and Rayi had conversations with nearly 300 individuals to gain a deeper understanding of the challenges faced by the unbanked and underbanked segments.

Through observations of the segment’s daily life and their experiences in onboarding DFS, Anin and Rayi discovered massive failures throughout their onboarding process.

1. Identifying the Challenges Faced by Unbanked and Underbanked Segments in Onboarding DFS

Onboarding Process Failures. Source: Extracted from Anindya Fitriyanti’s and Rayi Harjani’s presentation.

Firstly, the unbanked and underbanked segments are not connected with technology because they can’t afford to be. Their phones’ storage is limited, leaving them no space to install DFS applications. Furthermore, they prioritize basic necessities above the internet, so they’ll only top up their data if they can spare the money.

Secondly, they face difficulty in utilizing certain features. For example, facial recognition. Without assistance or specific instruction, they might not understand where to place their ID, take too long to record, or are unaware they have to take their glasses off.

All this, combined with poor digital and financial literacy, concretely proves that assistance is necessary for them to onboard DFS.

However, based on previous observations, Anin and Rayi still found high reluctance and dormancy even in fully assisted onboardings. To delve deeper into the root factors, they used the iceberg model (a model commonly featured in systems thinking).

Iceberg Model on Challenges to Onboard DFS. Source: Extracted from Anindya Fitriyanti’s and Rayi Harjani’s presentation.

The iceberg model can be separated into four main parts: Events, Patterns or Trends, Structures, and Mental Models. Using this model, Anin and Rayi discovered the following:

1. Events: individuals from the unbanked and underbanked segments show reluctance and dormancy with DFS.
2. Patterns or Trends: they need a greater push from their surroundings and full assistance because their self-initiative to onboard is low.
3. Structures: the daily ecosystem of individuals is very self-sufficient. From conversations with locals, Anin and Rayi found that they favor cash and borrowing from surrounding social circles because it’s more convenient.
4. Mental Model: at the core, the main reason why individuals from the unbanked and underbanked segments rarely onboard is that to them, DFS is inconvenient and lacks value.

2. Identifying the Connections Between All Stakeholders

To further investigate and understand all of this data, Anin and Rayi continued to look beyond individuals to look at the bigger picture: the ecosystem and its stakeholders. To do this, they created a framework to synthesize and visualize the synthesized data in the form of a network map.

Network Map: Surroundings. Source: Extracted from Anindya Fitriyanti’s and Rayi Harjani’s presentation.

The first three factors are personal, mainly featuring the media, home, and work environment. These surroundings tend to reinforce the fear of individuals in unbanked and underbanked segments regarding scams around DFS.

Network Map: Government. Source: Extracted from Anindya Fitriyanti’s and Rayi Harjani’s presentation.

Governmental sectors also face difficulty in distributing financial aid. While the government disperses aid via banks or digital wallets, individuals are hesitant to utilize it due to potential exploitation from deceptive agents or middlemen.

Network Map: Providers. Source: Extracted from Anindya Fitriyanti’s and Rayi Harjani’s presentation.

Furthermore, providers each have different views on their purpose. Bank sales focus on lending not onboarding; bank units can educate and onboard, but it’s improbable due to location-related problems; agents are nearby, but they’re not interested in helping as it reduces their income; field officers reach out, but people in rural areas are afraid they’re a fraud.

Network Map: Continuation of Government. Source: Extracted from Anindya Fitriyanti’s and Rayi Harjani’s presentation.

The segment trusts the government, but the initiatives on the ground are done in silos; government agencies work separately, and it’s done on an ad-hoc basis — according to method, system, or principle.

Anin and Rayi laid out this network map to display the whole ecosystem. They stated that while everyone has different motivations and isn’t aligned, a shared vision and collaborative effort on the ground is vital to build trust and value and dispel the fear people have regarding DFS.

3. Conclusion: A Call for Coordinated Efforts in Building Financial Inclusion

Anin and Rayi continued to state that only solving the onboarding barriers wouldn’t be impactful because there’s a multitude of underlying issues.

They concluded the talk by reframing the question “How Might We (HMW) solve the onboarding barriers?” into “How Might We align all stakeholders to create a coherent value at both an individual and community level?”

In conclusion, a shared vision and collaborative effort across all stakeholders — government, financial institutions, service providers, and individuals themselves — alongside trust and value, is the key to unlocking the true potential of financial inclusion and empowering millions of Indonesians to improve their livelihoods.

More articles about the conference coming soon, so don’t miss any by following Somia CX Medium!

Read more articles on Systems Thinking from the Somia Team here:

• Systems Thinking in Design: What is it? — Part 1
• Systems Thinking in Design: Why is it important? — Part 2
• A Framework to Embed Systems Thinking into Design Thinking Process
• Systems Mapping Tools & Design Levers
• Systems Thinking in Design: Shifting Our Mindset
• Systems Thinking in Design: Systems Innovation

I’m Kimora, an intern at Somia CX. I’ll be publishing more articles soon; you’ll be able to read here! I’m also on LinkedIn. 😄