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How Mobile SMS Powers a Digital Bank Network for Indonesia’s Rural Population

Willis Wee
Willis Wee
9:18 pm on Feb 11, 2013


Founded by Joseph Gaol in 2008, VOX, which stands for Virtual Online Exchange, aims to help the rural population in Indonesia set up bank accounts. According to Joseph, Indonesia has over 220 million mobile subscribers but only has 50 million bank users. Joseph remarked that a majority of Indonesians just don’t trust the banks.

As many of us have the perception that banks are all about physical branches, ATMs, and bureaucracy for issuing loans, Joseph argues that the traditional bank model doesn’t work well with the rural population in Indonesia. Instead, Joseph explains that VOX has, to use his phrase, “mobile street vendors” to connect with the local people. A total of 12,000 of them are in the outskirts of Jakarta and these vendors also act as micro-lenders. As lenders, they sign an agreement with VOX and comply with all terms and conditions set by them to ensure that money is managed in a legal manner.

These lenders – or rather, street vendors by trade – are usually very well connected within the local community. They are also in charge of educating customers in using VOX’s mobile banking system while at the same time helping customers to deposit, withdraw, or to make a loan.


Customers will send a short code via SMS to VOX. The street vendors will then meet the user to collect or pass the cash to the customers. Using the same SMS code system, users can also use their accounts to purchase Facebook credits and pay their utility bills. Right now, VOX is hoping to include more merchandisers within its digital bank system to make payment more simple for its 1.5 million customers. Joseph reveals that, on average, the bank balance per user is at 300,000 Rupiah ($31). So the amount per transaction can’t be high.

Peer-to-peer microlending

Loans are a huge part of VOX too. Joseph says that the traditional banks typically require reliable proof of credentials from customers before approving a loan. People living in rural areas, as he believes, have low self-esteem when it comes to getting a loan from the big banks. But VOX focuses on smaller loans targeted at customers who need the money to run small businesses, similar to microlending. For example, a customer who needs $200 to buy vegetables in bulk from a wholesaler can approach VOX for a loan. Joseph explains that they are usually able to get back the principal sum with interest pretty quickly.

Here’s a simple case study: Andi, the merchant who borrowed the money from VOX will use it to purchase vegetables and sell them the next morning. He will typically earn about 50 percent profit in the business deal that necessitated the loan, and part of that will be paid as interest to VOX the very next day. So if a 5 percent margin were to be the interest, John will be able to earn a 45 percent margin. VOX’s working capital loan ranges from 5 million to 35 million Rupiah ($516 to $3,611).

It took three years for Joseph to obtain a bank license in 2009 so he can actually start collecting money in Indonesia. In 2010, MStar, the parent company of VOX, also acquired a small bank called BPR Danamitra to form the backbone of VOX. To ensure the entire digital bank system works, Joseph believes that building trust amongst customers is essential. As he says:

Our customers live in the outskirts [of Jakarta] and the slums. To build trust, we need to be personally connected with them. Our street vendors have to be part of the community to build that trust.

VOX is certainly not the most professional bank in the world. But it works well, at least for the rural population of Indonesia.

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Have Your Say
  • Man

    From what i read I guess rural population prefer physical human connection to anything else. Cost for offices, staff, and branches is use to pay for commission for the street vendors. this is a very smart way to create bank network using existing technology which is the people’s non-smart mobile phone.

  • http://www.techinasia.com Willis Wee

    Hey Man – Great summary. You’re right.