Indonesian state-owned Bank Negara Indonesia (BNI) is exploring setting up a venture capital arm and begin investing in fintech startups, according to BNI director Rico Rizal Budidarmo.
“There has been a proposal about that, and it’s already sitting on my desk right now. It’s only a matter of time,” Budidarmo told reporters in Jakarta.
“In the meantime, we have already launched a few initiatives to promote fintech, particularly digital banking. As an organisation, we also have many designated divisions to help us develop this technology to support the business,” he added.
If realized, the move would put BNI among a host of banks that have already launched, or are planning to acquire, their own VC entities.
The most notable of these is state-owned Bank Mandiri that launched its own VC unit in 2015. The VC arm, Mandiri Capital Indonesia (MCI), has been one of the most active investors in fintech since then, committing $15-20 million in investments per year.
Recently, state lender Bank Rakyat Indonesia (BRI) also announced that it was in the process of acquiring a VC firm.
The due diligence is currently underway and is expected to conclude this year. “(The acquisition is) considering that we don’t have VC and security subsidiaries yet. We continue to focus on expanding and strengthening our subsidiary units,” BRI president director Suprajarto was quoted as saying earlier.
It is very likely that the lender’s new VC arm will be headed by Indra Utoyo, a former director for innovation and strategic portfolio at Telkom, whom BRI appointed last March as its operational director.
In January this year, private lender Bank Central Asia (BCA) launched a venture capital business unit called Central Capital Ventura (CCV). It has committed Rp 200 billion ($15 million) in investments so far.
According to market observers, total investment into the Indonesian fintech industry is expected to reach $8 billion by 2018. Authorities and players alike have been working together to embrace the boom, launching new regulations and injecting capital into the sector.