Dr. Iwan Pontjowinoto Jakarta, November 2019 Digital Revolution Paradigm in Islamic Economy and Finance
Financial Literacy & Inclusivity 51% Adult without bank account: Low financial literacy, despite: 42% due to insufficient fund Internet penetration 64% of pop. 32% expensive Mobile internet 36% of pop. 25% lack of document Smart phone users 26% of pop. Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 1
Internet Market & Productive Population CAGR Internet Economy Market Size (GMV, $B) 28% Productive Population Millennials Age Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 2
Middle Class Muslim Market Indonesia is the largest The Hijra-bound Millenials Muslim country in the world Transformed : more religious with high growth in middle class Seeking religious role models 24% of Middle Class Muslim 209 Muslim million population 2010 New Gen-X Muslim Seek halal lifestyle Interdependent future Muslim 27% of Middle Class Muslim 233 population 2020 million (projected) Husnul Khotimah Seniors Seeking active & halal life Optimizing their assets & skills MAC Muslim 2020 103 8% of Middle Class Muslim (projected) million Source: World Bank, BCG and BPS Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 3
Millennials Activities Millennials like the most: • Spend time with family • Sport and outdoors activities • Culinary • Travelling • Hang out with friends Priority in life ; • Making parents happy • Owning a house • Becoming good parents • Becoming successful entrepreneur • Become rich Source: IDN Research Institute – Indonesia Millennials Report, 2019 Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 4
Millennials and Finance Financial Condition: 51.1% of the income is drained for monthly expenses. 10.7% of their income for savings. 6.8% of the income for insurance 5.3% for installments and investment, and 5.3% for donation. Financial products • 80.2% have bank products. • 19.3% have health insurance (BPJS). • 17.2% have leasing/mortgage. • 4.2% have insurance. Source: IDN Research Institute – Indonesia Millennials Report, 2019 Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 5
Millenials Financial Behavior Source: IDN Research Institute – Indonesia Millennials Report, 2019 Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 6
Digital Revolution & Millenials • Activity are digital based. Starting from culinary and traveling destination, reference to purchase of goods and services are done online Millennials ready for digital era. • Productive - not afraid to start their own business. Main priorities : 1) Opportunity for self development, 2) feeling comfortable in doing their work, 3) seek to develop creativity further, and 4) have multitasking ability when working C apital for strengthening Indonesia’s economic independence in the future, including creative economy industry. • Have cross border network. They are a connected to each other, and through social media: 1) their access to information and friends are going wider, 2) they can voice their opinion through social media, and 3) develop social empathy and solidarity Strong foundation to develop socially responsible businesses. Source: IDN Research Institute – Indonesia Millennials Report, 2019 Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 7
Middle Class Muslim Trends Adopt Islamic Values (Maqashid of Sharia) Hijra : Transformed Building new communities The New Modern Quest for better understanding of Islam Passion for Learning Delivered in contemporary style Ways to be connected in a community Halal food in fusion fashion Culinary & Fashion Trendy muslim fashion and cosmetics Wants to travel in halal fashion More entrepreneurials Self Sufficiency Building halal businesses Islamic financing & investment Islam is rahmatan lil alamin Contributions Care for a better world clean lifestyle Crowd funding campaign for philanthropy Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 8
Digital Revolution in Islamic Economy • Finding Qiblat, Mosque, Hijra : Transformed • Schedule for Shalat, Fasting, other ibadah • Al Qur’an, Prayers, Murottals • Credible and interesting articles Passion for Learning • Talkshows, learning groups, podcast • Focus group chats, with/without Ustadz Info and location of halal certified food, Culinary & Fashion restaurants, hotels, medical services and other halal services (incl. travel & umrah) • Islamic financing, protection, investments Self Sufficiency • Consultancy in halal business • Solution for personal financing problems • Info on social & charity projects Contributions • Join social activity communities • Crowd-funding for zakat & waqaf Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 9
Digital Solution in Islamic Economy Payment Food Gateway e-Wallet Fashion Payment Trade e-Comm Cosmetic Crowd Finance Market s Funding place P2P Deliver Pharmacy Forwarding Asset Financial Investment Finance Transport Travel & Transact Agriculture Tourism Insurance Business Mortgage Services Fishery Home Default Info Services Solution Social Educ Security Services Farm Health Zakah Posting Services Waqaf Da’wah Chat Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 10
E-Wallet : Local Payment Apps Source: MomentumWorks – Indonesia Fintech Report, 2019 Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 11
2018 Wakaf 2014 - 2018 Donations : IDR 237.83 Billion Donations : IDR 84.5 Billion Campaign : 11,650 Projects Beneficiaries : 9.223.281 Persons Crowd : 531,353 Persons Crowd : 10.432 Parties Purpose Purpose • • Medical/Health : 25% Medical/Health : 56% • • Religious : 22% Social : 31% • • Humanity : 17% Education : 9% Statistics on Donation Statistics on Donation • • Average Donation IDR 230.000 49% IDR 100.000 – 1.000.000 • • Biggest Project IDR 4.2 Billion Biggest Project IDR 10.2 Billion • • Majority Project < IDR 25 Mill. Majority Project < IDR 750 Mill. Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 12
Digital Revolution in Islamic Finance Market for Innovative Financial Technology will continue to Grow • Industry will continue to grow until the financial services gap is met • Market has adapted to plastic money will welcome internet-money Challenges in Financial Literacy and Inclusiveness • Information through social media has been widely accepted • More interactive internet-based learning facility will thrive Abuse in Digital Economy need to be addressed • Data privacy and security will have to be improved • Credibility and innovative information to fight hoax High potential for Islamic Financing and Philanthropic Crowd-funding • Should have muslim-friendly vision, value and ecosystem • Huge untapped potential in zakat & waqaf Collaboration, not cut-throat competition • Complementary collaboration between existing and new startups • Imported business model should be well adapted to local behaviour. Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 13
Digital Revolution in Islamic Finance Market for Innovative Financial Technology will continue to Grow • Industry will continue to grow until the financial services gap is met • Market has adapted to plastic money will welcome internet-money Challenges in Financial Literacy and Inclusiveness • Information through social media has been widely accepted • More interactive internet-based learning facility will thrive Abuse in Digital Economy need to be addressed • Data privacy and security will have to be improved • Credibility and innovative information to fight hoax High potential for Islamic Financing and Philanthropic Crowd-funding • Should have muslim-friendly vision, value and ecosystem • Huge untapped potential in zakat & waqaf Collaboration, not cut-throat competition • Complementary collaboration between existing and new startups • Imported business model should be well adapted to local behaviour. Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 14
Digital Revolution in Islamic Finance Market for Innovative Financial Technology will continue to Grow • Industry will continue to grow until the financial services gap is met • Market has adapted to plastic money will welcome internet-money Challenges in Financial Literacy and Inclusiveness • Information through social media has been widely accepted • More interactive internet-based learning facility will thrive Abuse in Digital Economy need to be addressed • Data privacy and security will have to be improved • Credibility and innovative information to fight hoax High potential for Islamic Financing and Philanthropic Crowd-funding • Should have muslim-friendly vision, value and ecosystem • Huge untapped potential in zakat & waqaf Collaboration, not cut-throat competition • Complementary collaboration between existing and new startups • Imported business model should be well adapted to local behaviour. Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 15
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