Scanning barcodes and pushing buttons at points of sale are quite common. As transactions go digital, the world of financial technology is expected to be more inclusive.
In recent years, financial technology (fintech) has been gradually growing as e-commerce was introduced in the country, triggering a number of non-cash transactions. The fintech ecosystem has improved over the years since collaboration between fintech companies with conventional financial institutions and vendors, bolstered by the support of the national government.
Held in Medan, Fintech Days 2018 was one of the initiatives to build a strong financial ecosystem. According to Fintech Indonesia Association (Aftech), 63.9 per cent of fintech companies have connected with the banks through an Application Programming Interface, which provides efficient transfer of funds for people who use cross-over financial services.
In late 2017, there were more than 230 fintech companies in Indonesia, offering payment, lending, tech insurance and other financial services. Aftech noted that the total number of transactions through fintech last year reached up to around IDR 2.4 trillion - mostly contributed by lending and payment transaction. It expects to generate transactions up to IDR 7 trillion in 2020.
Digital transactions were believed to be valued at USD 18 million last year, following the ongoing adaptation of a cashless society among Indonesians. E-wallet and e-payment are one of the familiar examples of cashless transactions using full digital technology.
GoPay by Gojek is one of the largest e-payment services which provides transactions for hundreds of merchants through its mobile application. Recently, Bank Negara Indonesia (BNI) introduced Yap!, a revolutionary payment technology that offers many levels of vendors including as small and medium enterprises’ (SME) products across cities in Indonesia.
In late 2017, there were more than 230 fintech companies in Indonesia, offering payment, lending, tech insurance and other financial services. Total number of transactions through fintech last year reached up to around IDR 2.4 trillion - mostly contributed by lending and payment transaction.
Newcomers Jenius by BTPN and Ovo offer a digital experience of online banking and payment, offering personal or group payment, as well as points of collection for shop purchases. The application also helps personal finance managers monitor incoming and outgoing transactions.
Kredivo and Cicil are digital credit cards that target middle market and allows users to use credit for transactions without physically using their card. E-commerce companies such as Bukalapak and Tokopedia offer an in-app e-wallet that allows the consumers to credit and debit money from the marketplace application.
Everybody Can Grow
Many fintech companies target those in their most productive ages and also the millennials. But the company is also open to the possibility of being financially inclusive, especially for the fintech startups which offer lending services.
With the spirit of “Semua Bisa Tumbuh” (Everybody Can Grow) at Fintech Day 2018, the fintech industry is able to fill the void of financial services in a segment of society that has not yet got access to formal financial services. Lending and also payment fintech services has the ability to open up access to multiple markets within a region more efficiently and securely.
Leading fintech platforms such as Modalku and Investree offer young generation entrepreneurs and SMEs an opportunity to join peer-to-peer (P2P) lending to fund and grow their business, creating fair deal between funder and creditor. Fintech is expected to open financial access to 80 million individuals and 49 million micro and medium enterprises that have not been bankable, and fill the development financing gap of IDR 988 trillion.
To build a strong and responsible lending fintech sector, the Financial Services Authority (OJK) and the government must improve regulations to minimise the possibility of risk such as liquidity mismatch and breach of cyber security.
OJK of Indonesia has launched a registration system for fintech startups, marking a formal recognition of the sector. The platform is designed to set the direction of the fintech industry development, supervised by Bank Indonesia. With clearer regulation, better data security and more consumer protection, fintech in Indonesia can be a national priority to improve the quality of life as well as galvanise the economy at the macro level.
This article is originally from paper. Read NOW!Jakarta Magazine April 2018 issue “Money and Finance”. Available at selected bookstore or SUBSCRIBE here.