Banks should partner with microfinance institutions (MFIs) as both can leverage off the other for their reach into an untapped market, according to Irianto Kusumadjaja, Chief Information Officer at Bank Andara, who spoke at the Inaugural Technology & Innovation – The Future of Banking & Financial Services conference in Jakarta.

According to Kusumadjaja, more than 40 million people in Indonesia are unbanked or under-served by banks, but that does not mean that they do not have money. There are also 120,000 MFIs across the country that serve basic banking needs.

MFIs use agents who physically visit rural areas across the country, but only provide saving and lending services. Kusumadjaja sees that as a potential as banks have struggled to tap this unbanked market.

“People still need cash, people still need a cash agent… we are talking about a human teller machine," Kusumadjaja said.

Kusumadjaja highlighted the unbanked are not just those living in rural areas, and low income earners, they are "people living in your neighborhood… but are not being served by a bank.”

Indonesia is currently going through a branchless banking pilot project involving leaders from several banks and telcos, including Bank Mandiri, Bank Rakyat, and CIMB.

The pilot is reaching out to the unbanked rural population by sending out agents who help the unbanked person sign up for a bank account through a mobile phone.

The project has faced infrastructure bottlenecks and could benefit from a partnership with MFIs, according to Kusumadjaja.

According to Kusumadjaja, banks can also help by offering mobile technology and thier networks as that can help MFI grow.

MFI processs are still very manual as agents oftestill carrying passbooks and cash and writing things down, which can be risky.