Telkomsel’s E-Money Innovation for Boosting

Indonesia’s Digital Economy and Financial Inclusion

Danu Wicaksana Yogyakarta, 16 November 2017

2

1 Developing countries include Kenya, Mexico, India, Brazil and South Africa

2 Developed countries include China, Poland, Singapore and South Korea

Fraction of Indonesia’s population that is unbanked compared to 39%1 in similar countries

Number of ATMs per 1,000 people compared to 0.4891 in similar countries

Fraction of cash transactions by no of transactions compared to 53%2 in similar countries

Number of banks branches per 1,000 people compared to 0.105 in similar countries in the region

0.165

83%

60%

0.085

36% People over 15 years old with formal bank account compared to ~70% in similar countries

Indonesia

remains one of

the largest

growing economy

in the world.

10th largest

economy in

terms of PPP

>250M

population

Fintech-based services has a huge potential in Indonesia, whereby ~60% of its

population is still unbanked and ~83% of transactions is still done by cash

3

26

13

3

Farmer

22

Civil Servant

Pensioner

5

Students

Informal Workers 13

Handyman

33

Micro traders 55

Productive poor

Telco company has important role in driving financial inclusion and cashless society, given

low banking penetration at ~40% and ultra-high mobile phone penetration at ~130%

60% of 170mn adult Indonesian population

is still unbanked Cost of banking is high

60% unbanked

population

40% banked

population

G2P recipients

Supply side Demand side

Branch cost setup is high

Perceived as non profitable

market

Inadequate IT infrastructure

Operational complexity

Long distance to do banking

Unaffordable administration

cost

Small balance of saving

4

Telkomsel has great network and distribution channels that can be used to provide a more

effective and efficient Financial Inclusion to every Indonesian

4G

3G

2G

Cover ~99% of Indonesian population

Widest distribution channel across Indonesia

Channel Partners #

Dealer 61 ~400K registered outlet

& ~800K reseller

Bank 56 ~100,000 ATMs

Retail 75 ~30,000 stores

Devices 32 950 stores

Direct - 1,000 Grapari and

MOGIs

Online 17

T-Cash

Merchant ~40,000 outlets

Best network coverage & quality

34% 40% 41%

53%

45%50%

12%

15%

9%

147K

94K

59K

Telkomsel Competitor Competitor

Largest #BTS Best Broadband Experience (Mbps)

4G

3

G

16.18.6 3.3

6.32.8

1.5

Telkomsel Competitor Competitor

Telkomsel Competitor Competitor

Source: JPMorgan Aug 2017 Report, National Result

4G

3G

2G

Source: Infomemo H1 2017

5

In Telkomsel, we have T-CASH as our mobile financial services product that aims to

help driving financial inclusion and cashless society in Indonesia

Micro

P2P

transfer

G2P

disbursement Micro

saving

Micro

Loan

Micro

Insur-

ance

Tap to Pay

Cashless

transaction

Lifestyle

Retail/micro

payment Trans-

portation

Cashin

“T-CASH vision is

to be the #1 mobile

payment for every

Indonesian”

• Serving ~20m

Indonesians by 2020

and ~50m by 2025,

both urban and rural

population

• Driving financial

inclusion and cashless

society in alignment

with Indonesian

government agenda

6

T-CASH has two major customer segments: Lifestyle and Micro Segments

2. Micro

Mostly Unbanked/

Underbanked Segments, with

following characteristics:

▪ Live in rural areas with no

access of financial service, or

live in urban areas but hesitant

to go to financial institutions

▪ Tend to keep money in their

house, high risk of theft

▪ Many are targeted recipients

of government aids (e.g. non-

cash Rastra program, UMI and

other programs)

1. Lifestyle

Mostly Banked Segments, with

following characteristics:

▪ Prefer fast and convenient

payment method for daily low

value cash transactions

▪ Demand highly safe payment

method

▪ Require great customer

experience and “look & feel”

7

T-CASH is one of the leading players in the Indonesian e-money space, with more

than ~60,000 cash-in points, 5 mio users and ~40,000 merchant footprints

*800#

1. Cek Saldo

2. Token

3. Kirim Uang

4. Is i Pulsa

5. Pembelian

5. Pembayaran

6. Info

USSD

*800#

Mobile App

Dengan menekan tombol proses , saya telah

menyetujui syaratdan ketentuan

Web Check-out

(online/web payment)

T R A N S F E R

M O N E Y

P A Y

O N - M O B I L E

P U R C H A S E

O N L I N E

T A P T O - P A Y

linked

account

Multi

purposes

use cases

- Corporates

- Government

- Remittance

Agents

Grapari

Indomaret

Merchant

T-CASH Cash-in Channels: ATM, modern retails,

agents, Grapari, etc

ATM Bersama

ACCESS CASH IN USAGES

NFC Sticker

T-CASH Access Points: Mobile App, NFC Sticker, USSD,

and Web-Check Out

T-CASH Use Cases: Offline Tap Payment,

Mobile Payment, P2P transfer, Online Purchase

8

T-CASH is using two modern payment technologies in its offline merchants:

TAP (using NFC sticker) and SNAP (using QR code)

1. TAP (NFC sticker)

• Require EDCs or NFC-

enabled phones to

accept payment

2. SNAP (QR Code)

• Only require printed QR

code (lower Capex and

Opex) vs. EDCs

9

Most consumers are happy with the

service, which can trigger viral

marketing in their communities

Source: customer survey, N=184

likely to

recommend to

their friends

92%

71%

62%

have good

experience on

last purchase

will definitely

keep using

TCASH TAP

~1.1 million views

~450k fans

~45k followers

T-CASH has a solid presence in Social

media, which is very important to engage

its customers

5+ mio T-CASH

registered users >60 mio # of Annual

Transactions

(run-rate) 34

Number of Indonesian

provinces with active

T-CASH users

~30k followers

As of today, T-CASH has created good tractions in the Indonesian market, with >5 mio

registered users in all Indonesian provinces with >90% customer satisfaction level

10

In driving financial inclusion, we have initiated partnership with BTPN, BTN and BNI

to provide financial inclusion services for millions of customers across Indonesia.

~200K Agents

across Indonesia covering

all provinces

Channel Integration Goyang Kampung Desa Nabung Nabung Sekolah Ekstra Blusukan G2P Rastra

~2 Mn Customers

acquired to date

11

T-CASH has also worked with the Indonesian government to support its non-cash

food social assistance program in 2015-2016

3 4 5 2 1

... and 2nd Trial for Rastra (Beras Sejahtera) distribution on Aug-Sep 2016

Beneficiaries register at the

nearest agent

Funds cash-out and exchange of

food aid at the agent

Registration of

beneficiaries is

based on KTP and

PKH/mail invitation

Activation of T-CASH

dan TCASH TAP

Pick-up Rastra

Social aid cash

withdrawal

Distribution of non-

cash (e-money) funds

Sending invitations

to beneficiaries

City Beneficiaries

Jakarta 621

Solo 257

Bogor 246

Medan 387

1,521

Beneficiary data

IDR 100k as food

assistance

Rp 100k as social

assistance

Successful pre-pilot 1 with 2x disbursement for 2,022 beneficiaries based in 8 locations in Dec’15 -Jan’16

14 Jan 2016 22 Dec 2015 15 Dec 2015 30 Nov 2015

28 Nov 2016 4 Dec2016 14 Dec2016

12 Dec2016 20 Dec2016

1 Location 5 Locations

2 Locations

Preparation

IT System, Methodology,

Communication,

Agent Acquisition, Training

8 Locations

31 Jan 2016

Cities Villages Beneficiaries

Bendungan Hilir 216

Karet Tengsin 368

Cileduk Tengah 412

Leuweung Gajah 375

Lemah Abang Kulon 233

Sendangmulyo 290

Tembalang 78

Kedungmundu 50

Jakarta

Cirebon

Semarang

12

Moving forward, T-CASH will further strengthen partnership with banks and become the

platform that channels various financial products (e.g., micro loan, micro insurance)

MICRO SAVING MICRO G2P MICRO LOAN

Rp

MICRO INVESTMENT MICRO INSURANCE

TCASH financial access for unbanked

CASHIN /SAVINGS

REGISTRATION /KYC

CASHOUT/WITHDRAW

REMITTANCE

INSURANCE

LOAN

INVESTMENT

LINKED ACCOUNT

for better Indonesia