Indonesia may be known more for its exotic culture and its enticing beaches, but by the end of the year, it may be known for one more thing: fintech.
Deal Street Asia:
Indonesia – the largest economy in the south east Asian region – is betting on the great big fintech opportunity riding on its demographics and unbanked population. Indonesia, which has already seen the emergence of 130 fintech companies, is expecting this number to double in a year with $3.6 billion worth of transactions on this model over the next one year, deputy director of OJK, the financial services regulator, Pak Tuahta Aloysius Saraguh, said in an interaction. Pak Aloysius has been instrumental in encouraging the Fintech industry in Indonesia.
As mentioned, a great number of Indonesians remain unbanked. Estimates peg the number at a whopping 36% of the adult population – much lower than the percentage of mobile phone users – making the country especially ripe for financial inclusion-based innovations.
The fact that the nation has a massive – and growing – population should help fintech companies even more. As Pak Aloysius also points out, Singapore and Australia may have ignited the Asian fintech boom but their markets are tiny compared to Indonesia’s:
“…they are very small markets, and its actual utility in a big way can only be understood in markets like Indonesia. Both Jakarta and Surabaya have bigger markets.”
And the kicker is that they may be more eager to ask for loans than most:
“…that’s why Fintech is growing here. Necessity of people to borrow money is extremely high in Indonesia.”
That said, Indonesian fintech still has a ways to go. As Pak Aloysius notes, the country has yet to create a proper ecosystem for fintech firms to flourish in. There’s still a need to arrange backing from the government, and – using the Australian startup model – arrange funding from the exchanges and the telecoms as well.
Once that’s all hammered out though, we could expect a lot of changes there:
“If we can set it up like Singapore and Australia, I believe we will have more than 300 FinTech companies in no time.”