Digital Revolution Paradigm in Islamic Economy and Finance...Seeking active & halal life...

Digital Revolution Paradigm in

Islamic Economy and Finance

Dr. Iwan PontjowinotoJakarta, November 2019

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 1

Financial Literacy & Inclusivity

51% Adult without bank account:42% due to insufficient fund32% expensive 25% lack of document

Low financial literacy, despite:Internet penetration 64% of pop. Mobile internet 36% of pop.Smart phone users 26% of pop.

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 2

Internet Market & Productive Population

Productive Population

Internet Economy Market Size (GMV, $B)

Age

Millennials

CAGR28%

209million

233million

103million

Indonesia is the largest Muslim country in the world with high growth in middle class

Muslimpopulation 2010

Muslim population 2020 (projected)

MAC Muslim 2020 (projected)

The Hijra-bound MillenialsTransformed : more religiousSeeking religious role models24% of Middle Class Muslim

New Gen-X MuslimSeek halal lifestyleInterdependent future27% of Middle Class Muslim

Husnul Khotimah SeniorsSeeking active & halal lifeOptimizing their assets & skills8% of Middle Class Muslim

Source: World Bank, BCG and BPS

Middle Class Muslim Market

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 3

Millennials

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 4

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

Millennials and Finance

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 5

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

Millenials Financial Behavior

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 6

Source: IDN Research Institute – Indonesia Millennials Report, 2019

• 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 Capital 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.

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 7

Source: IDN Research Institute – Indonesia Millennials Report, 2019

Digital Revolution & Millenials

Middle Class Muslim Trends

Hijra : Transformed

Passion for Learning

Culinary & Fashion

Self Sufficiency

Contributions

Adopt Islamic Values (Maqashid of Sharia) Building new communities The New Modern

Quest for better understanding of Islam Delivered in contemporary styleWays to be connected in a community

Halal food in fusion fashion Trendy muslim fashion and cosmeticsWants to travel in halal fashion

More entrepreneurialsBuilding halal businesses Islamic financing & investment

Islam is rahmatan lil alaminCare for a better world clean lifestyleCrowd funding campaign for philanthropy

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 8

• Finding Qiblat, Mosque, • Schedule for Shalat, Fasting, other ibadah• Al Qur’an, Prayers, Murottals

• Credible and interesting articles• Talkshows, learning groups, podcast• Focus group chats, with/without Ustadz

Info and location of halal certified food, restaurants, hotels, medical services and other halal services (incl. travel & umrah)

• Islamic financing, protection, investments • Consultancy in halal business• Solution for personal financing problems

• Info on social & charity projects• Join social activity communities• Crowd-funding for zakat & waqaf

Digital Revolution in Islamic Economy

Hijra : Transformed

Passion for Learning

Culinary & Fashion

Self Sufficiency

Contributions

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 9

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 10

Digital Solution in Islamic Economy

Chat

Payment

Transact

Info

Posting

Deliver

Food

FashionCosmetic

s

Pharmacy

Agriculture

Fishery

Farm

e-Comm

Marketplace

Forwarding

Travel &Tourism

Transport

BusinessServices

HomeServices Educ

ServicesHealth

Services

Da’wahWaqaf

Zakah

SocialSecurity

DefaultSolution

Insurance

FinancialInvestment

PaymentGateway

e-Wallet

CrowdFunding

TradeFinance

P2P

AssetFinance

Mortgage

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 11

E-Wallet : Local Payment Apps

Source: MomentumWorks – Indonesia Fintech Report, 2019

2018 Wakaf 2014 - 2018

Donations : IDR 237.83 Billion

Campaign : 11,650 Projects

Crowd : 531,353 Persons

Purpose• Medical/Health : 25%• Religious : 22%• Humanity : 17%

Donations : IDR 84.5 Billion

Beneficiaries : 9.223.281 Persons

Statistics on Donation• Average Donation IDR 230.000• Biggest Project IDR 4.2 Billion• Majority Project < IDR 25 Mill.

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 12

Crowd : 10.432 Parties

Purpose• Medical/Health : 56%• Social : 31%• Education : 9%

Statistics on Donation• 49% IDR 100.000 – 1.000.000• Biggest Project IDR 10.2 Billion• Majority Project < IDR 750 Mill.

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.

Digital Revolution in Islamic Finance

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 13

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.

Digital Revolution in Islamic Finance

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 14

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.

Digital Revolution in Islamic Finance

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 15

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.

Digital Revolution in Islamic Finance

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 16

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 behavior.

Digital Revolution in Islamic Finance

Jakarta, Nov 2019 Dr. Iwan P. Pontjowinoto 17

Terima kasih