Technology Adoption in Microfinance: A Field Experiment in Indonesia

With the rise of technological development, more Microfinance Institutions (MFIs) have begun to leverage the benefits that technology offers to transform their process digitally. Other than streamlining organizational operation, there is opportunity for digital technology such as the introduction of a mobile app to have downstream effects on the borrowers’ digital adoption and financial behaviors. J-PAL affiliated researchers have been partnering with a microfinance cooperative who serves female clients, to collaborate on piloting activities to study the impact of a newly launched mobile app on the financial behaviors of their existing clients, who mostly have not been connected to the DFS ecosystem. There are potentials that a new app may further empower clients compared to the other typical digital wallet in the market, as it is designed in accordance with the cooperative’s operations and clients financial needs. Other than testing the logistical feasibility of future randomized evaluation designs, the piloting activities aim to investigate the different barriers clients may face in adopting such technology.

The project successfully completed a pilot of a mobile banking application designed for microfinance clients in Greater Jakarta, combining digital financial literacy training, user incentives, and peer support to better understand the opportunities and barriers to digital financial inclusion. Although adoption of the app remained lower than expected—largely due to a complex registration process, technical activation challenges, and varying levels of digital readiness among clients—the pilot significantly increased participants' awareness and understanding of digital financial services. The findings highlight that successful digital finance initiatives require not only user education but also simple, accessible technology and seamless onboarding processes. These lessons are now informing the partner's plans to enhance the platform and support broader adoption in future implementation.