The Indonesian Chambers of Commerce and Industry (KADIN) has said that the country’s fintech industry is expected to receive up to $8 billion (Rp 105 trillion) of investments by 2018.
Rosan Roeslani, chairman of KADIN said, the role fintech plays in the financial industry cannot be ignored, especially in creating and strengthening financial inclusion for the mass, and added: “In 2008, fintech investment stood at roughly $ 900 million. It had increased to three billion in 2013, and is projected to reach $ 8 billion by 2018,” Roeslani said at the Indonesia Fintech Festival and Conference (IFFC).“
But for the industry to grow, he added, the right ecosystem must be established. This includes regulations, communities, financing, as well as the right culture and attitude within and towards the industry.
“All these factors are an inseparable unit. With that, I believe that everyone can grow and expand sustainably. Adjustments in terms of regulations are normal, considering that the fintech sector is still in its early stages,” he said.
Southeast Asia’s largest market Indonesia has been witnessing an emergence of a number of fintech companies such as peer to peer lending company Modalku, mobile recharge platform Sepulsa, e-commerce financing company Kredivo, online micro-lending company UangTeman and many others.
Modalku, a platform that pools funds from the public and directs them into small and medium enterprises (SMEs), recently announced a S$10 million investment by venture capital firm Sequoia India.
Not long before that, Indonesian P2P marketplace Investree said it had secured a series A funding commitment from a local venture capital firm, Kejora. Details of the amount, however, were not disclosed.
Transactions through fintech in Indonesia are estimated to be Rp 40 trillion in the past two years, a rapid escalation alongside growth in internet usage in the country, with a third of its 250-million population going online. A fifth of that number, however, still have no bank accounts.
Around the globe, KADIN recorded that customers in the fintech sector in Africa has risen almost two times to 101.3 million users, from 57.8 million reported in 2012. North America has 90.7 million users, while Europe acquires 64 million.
Latin America saw a growth of 162 per cent of users, while in the Middle East the number of users has increased more than 300 per cent. In the Asia-Pacific region, investment in fintech rose fivefold to $ 2.7 billion in the first three months of this year from the same period a year ago.
More collaboration needed
Fourty-four per cent of fintech companies cited collaboration as at least one of several priorities, and 51 per cent described collaboration as critically important. It also shows that a collaborative environment can yield great results that will benefit the wider Indonesian fintech community.
The majority of the companies surveyed (38%) highlighted an increased sharing of best practices within the community is the greatest benefit of increased collaboration within the fintech players in Indonesia, while 25% of them believe it will increase the ability to leverage market data and analytics for customer profiling.
Karaniya Dharmasaputra, Secretary General of Indonesian Fintech Association said, boosting cooperation and increase connections among fintech companies in Indonesia are one of strategic objectives of the association, as it can help improve public access to technology-oriented financial services.
“In addition, the [survey] shows that many fintech companies in Indonesia are finding it difficult to advance financial inclusion and that greater Indonesian market is largely unfamiliar or misinformed about financial concept,” Karaniya added.
The survey also finds that the majority of fintech companies think current regulatory processes are slow and unclear, hence working with the government is crucial.
Five (5) areas with the highest demand for increased regulation are payment gateway (60%), E-money or e-wallet (58%), know your client (KYC) (57%), peer to peer (P2P) lending (57%), and digital signature (54%).