2 things local regulators must do to improve financial inclusion in Indonesia

Allowing partnerships with multiple service providers is one.

Looking ahead, from a perspective of further improvement, BBVA says the OJK can consider 1) Allowing agents to partner with more than one bank or multiple service providers, this would enhance reach in rural areas where access to formal financial services is limited. 2) Extant regulations mandate services providers to have branches in the eastern part of Indonesia or East Nusa Tenggara province, in order to be eligible for branchless banking services.

"Since the main islands of Java and Sumatra together have 80% of the total population of Indonesia, there exists tremendous scope of deepening financial inclusion through branchless banking in these main regions itself. Geographical restrictions can thus inhibit several potential services providers from offering branchless banking services to critical mass of population," adds BBVA.