Israel-Indonesia Futures – 2023 Challenge

Challenge: Birds-Eye View:

As an archipelago nation with more than 17,000 islands, digital financial infrastructure shows a promising future to promote financial inclusion in Indonesia.

Micro, small, and medium enterprises (MSMEs) account for 99% of businesses in Indonesia,  63.35 million of which are micro-businesses and 783,000 of which are small businesses. They also contribute to 61% of Indonesia’s GDP and employ 97% of the national workforce. MSMEs are therefore key in accelerating Indonesia’s economic growth, and are the main focus for the government’s target of achieving 90% financial inclusion by 2024.

However, most recent data shows that despite 210 million internet users, only 38 million digital savings accounts have been created. This figure resonates with other findings where less than 25% of internet users utilize their digital devices for productive or income-generating purposes.

While access to formal financial products in Indonesia has made tremendous strides over the past ten years – particularly during COVID – more than 100 million Indonesians remain unbanked, underbanked, or unfamiliar with formalized financial institutions and practices altogether.

Challenge: Up-Close:

In rural areas, women are typically the ones in charge of household finances. When there is no separation between household and business finances, women are practically also in charge of managing the money of the family business.

However, digital and financial literacy are the primary barriers for unbanked or financially under-served micro-entrepreneurs to optimize digital devices to improve their prosperity, advance their living conditions and optimize the educational opportunities for their children.

The vast majority of such businesses lack bank accounts and transact predominantly in cash, making it difficult for them to build a legitimate credit history that would enable them to gain access to formal services when they need them.

This challenge will focus on finding solutions for these women-owned micro-entrepreneurs to gain greater access to the digital financial tools they need to succeed.

The proposed solutions will impact women-owned micro businesses across Indonesia – and potentially beyond – through collaborative innovative approaches between Israeli and Indonesian participants.

Challenge Description:

This challenge calls for innovative go-to-market strategies that will utilize financial literacy education tools to encourage the target audience to adopt our Challenge Partner’s digital savings products.

Primary target customers will be women micro-entrepreneurs in predominantly rural areas across Indonesia.

Financial literacy education will therefore be core to the marketing strategy.

Sample solutions could involve, but are not limited to, videos with gamification content distributed through WhatsApp groups, community peer-learning through WhatsApps groups, social media marketing, or strategic partnerships with other service providers.

Questions Teams Will Consider:

During the program, teams will consider some of the following questions in developing a solution to this challenge:

• How might we design financial literacy education on saving that will motivate customers to adopt and use savings products to improve their finances and prosperity?
• How can we incorporate financial literacy education on saving as part of the go-to-market strategy?
• Rather than utilizing traditional product promotions, how might we seek strategies that will encourage sustainable adoption of the products through digital financial literacy education?
• How might we promote the adoption of these savings products through an innovative approach that fits with the cultural and socio-economic background of the target customers, e.g. through gamification and interactive financial literacy workshops?
• How might these solutions be replicated or adapted by other companies for other savings products in emerging markets with similar market conditions? 

Market Immersion:

To better understand the context of the challenge, the team members who reside in Indonesia will undertake site visits, and will conduct focus group discussions with the target customers in the field to gather insights for their bi-national teams, before designing the solution.

Final Deliverable:

At the end of the program, teams will be required to submit a presentation deck with the following elements included:

• Go-to-market strategy, including approach, methods and marketing ideas for the saving product.
• Financial literacy education strategy on saving as part of the strategy (via digital gamification, offline workshops, etc.).

The outcome may include charts, pictures, videos, etc that help the audience better understand the solutions.

The proposed solutions will be presented by the teams at the program’s final [closed] online event – with an audience from the Israel-Indonesia Futures networks from Israel and Indonesia.

Evaluation:

The final evaluation of each team’s solution will be made by a judging panel according to specific criteria:

• Effectiveness of content in targeting specific audience;
• Long-term sustainability;
• Cost-effectiveness;
• Potential for scaling up; 
• Potential for replication in other markets outside of Indonesia.

Our Challenge Partner:

Our Challenge Partner enables micro-entrepreneurs in villages across Indonesia to be funded by their investors in big cities, through a peer-to-peer lending platform, bridging access to finance for thousands of micro-businesses who were previously unbanked – thereby generating prosperity for Indonesia.

Based in Jakarta, our Challenge Partner has to date provided working capital micro-loans and financial training to over one million women micro-entrepreneurs and MSMEs across Indonesia – most of them in rural areas.

The team that the judging panel feels has presented a solution with the most promise will undertake a validation & partnership-building trip to further the initiative and expand their Israel-Indonesia networks. This will entail:

More details on eligibility and candidate criteria can be viewed here.