The author is the founder of Hijra Bank in Indonesia
Across Indonesia countless families are living pay cheque to pay cheque. The 2024 National Survey of Financial Literacy and Inclusion revealed that while the financial literacy index stands at 65.43 per cent, a significant portion of the population still struggles to understand even basic financial products.
The consequences of this knowledge gap are stark. An Institute for Development of Economics and Finance and GajiGesa survey found that 52.9 per cent of workers barely have enough money to make it to the end of the month, while 19 per cent run out midway through. Desperation forces many to turn to employer-provided loans or informal lenders, trapping them in a cycle of debt.
For many people, simply tracking expenses is not enough — there is a need for financial guidance. But personal financial advisors are too costly for most people. This is where artificial intelligence is making a difference, not just as a budgeting tool, but as a behavioural coach, nudging users towards better financial habits.
Traditional financial education fails because it is generic; a one-size-fits-all approach that does not adapt to individuals’ financial behaviour. AI-powered assistants can analyse how each user spends, saves and borrows, then provide tailored insights.
For example, instead of broad tips such as: “Save 20 per cent of your income”, an AI model trained on real user behaviour might suggest: “Your monthly spending on coffee increased by 1 per cent. Would you like to set a soft cap?”.
In Indonesia, low financial literacy meets high smartphone penetration and a strong sense of community, making gamification an effective tool for financial education. The success of gamification in ecommerce and social media suggests it can also be effective in changing financial behaviour.
Gamification offers methods such as peer comparisons: “You spent 25 per cent more than your peers in the same income bracket. Want to adjust?” It can also provide “streaks” and rewards by encouraging consistent saving through challenges and milestones.
In emerging markets like Indonesia, where banks hold the majority of financial data, the responsibility for driving AI-powered financial solutions naturally falls to these institutions. Recognising this, Hijra Bank is taking the first step towards bridging this gap.
In May 2024 Hijra Bank, in collaboration with the MIT-Sloan ASEAN Lab programme, conducted a joint study exploring various AI applications within its business model. This research led to the development of MISHA, an early version of the bank’s AI-powered virtual assistant, setting the stage for a more comprehensive financial literacy and management solution.
With the increasing availability of skilled AI engineers and open-source frameworks, the cost of developing AI solutions has become significantly more affordable. As digital banking evolves, institutions like Hijra Bank are leveraging AI-driven solutions to integrate commercial sustainability with customer financial wellbeing.
AI-powered tools are not just about tracking spending — they are about transforming financial behaviour. By integrating AI-driven tools like MISHA, banks can bridge the gap between financial knowledge and action.
As AI-driven financial tools become more integrated into banking, regulatory oversight will be critical in ensuring transparency, data security and ethical AI usage. In Indonesia, banks must comply with the Personal Data Protection Law, prevent algorithmic bias and collaborate with regulators like the Financial Services Authority and Bank Indonesia to align AI innovation with financial consumer protection standards.
As financial institutions integrate AI-driven financial literacy tools, they have the opportunity to move beyond transactions — empowering millions of people to achieve long-term financial security.
