Financial problems in Indonesia is a gift for the development of fintech in Indonesia. The low level of financial inclusion makes fintech as an alternative for the citizen that far from banking financial services.
The Financial problems in Indonesia somehow become a gift for the development of financial technology (fintech) in Indonesia. The low level of financial inclusion makes fintech as an alternative for the citizen that has not been touch by banking financial services.
Furthermore, there is a financial gap in the small-medium enterprise (UMKM) credit distribution that makes the UMKM players seek for an alternative credit service through fintech. Not to mention, the unique geography of Indonesia and the development in internet infrastructure for the past five years has raised the popularity of fintech in Indonesia.
The rise of fintech in Indonesia also well supported by the regulations that give clarity and certainty to the industry. The good cooperation between the stakeholders also strengthens the ecosystem of fintech inside the country. The regulator itself will issue a new regulation related to fintech in August 2018. The roadmap of fintech in Indonesia also being developed by them.
Based on the report that issued by AFTECH (Association of Financial Technology) Indonesia at the end of 2017, during 2017 all fintech company in Indonesia has been established the good connection with the bank, both direct connection (77%) as well as the non-direct connection (67%). Around 63,9 percent fintech players in Indonesia has also connected with bank trough API.
Another challenge that needs to solve is to conduct presence less and paperless customer verification (Remote KYC) since the geographic condition of Indonesia, especially in remote areas, preventing people from coming physically. Therefore, remote financial technology is the best solution to overcome those challenges.
Moreover, if we see from the target market, the biggest fintech user is coming from the middle class of the millennial group at the age of 25-35 years old. This group has an income of around five to fifteen million rupiahs per month, an affordable income to buy a smart gadget and connect with the internet.
They were also digital savvy. The millennial is generally familiar with technology; therefore, it is easy for them to adapt and adjust the innovations based on technology.
Fintech Growth Prediction in 2018
Bellow are the list of some fintech company in Indonesia that predict will experience significant growth in 2018 by the IDC Financial Insight, a research institution. This insight was released on 29th March 2018.
· Payment: GO-PAY, Midtrans, Xendit, Doku, and TCASH
IDC took the data before GO-JEK acquisition Midtrans. Therefore they separate GO-PAY and Midtrans. Some business maneuver that has been done by GO-JEK and Grab is potential changes the map.
· Lending: Modalku, Akseleren, Investree, Uang Teman.
· Marketplace: Aturduit
· Financial Management: Finansialku
· Company Solution: Jojonomic
Jojonomic started their service as a private financial recording system; now they develop into a platform of software as a service (SaaS) to simplify the reimbursement process. They have also developed the attendance list feature based on face recognition.
· Accounting Software: Jurnal
Fintech players are optimistic that they can support the government of Indonesia regarding economic development. According to AFTECH the government target of 75% financial inclusion in the year of 2019 is doable. However, it takes a good collaboration of the stakeholders as well as a solid commitment since it’s not an easy pathway.
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