For Indonesian payments startup OVO, the coronavirus pandemic has been a turning point.
The three-year-old firm, which saw a surge in transactions and new users following the pandemic, is now planning to ramp up its financial offerings.
“We will be elevating our open ecosystem platform and product infrastructure to provide more digital services. We want to be an accessible, affordable, one-stop platform for all financial needs of Indonesians,” said Jason Thompson, OVO’s CEO.
The company, Thompson says, wants to venture into wealth management, while introducing more offerings in its existing verticals of insurance and investments.
OVO is also stepping into 2021, with great optimism.
While revenues from retail and transport have understandably dwindled since the pandemic struck, the company’s e-commerce total payment value (TPV) grew over 110 per cent between March and September 2020. This was led by a nearly 50 per cent growth in lending disbursement, and an over 15 per cent TPV increase in food delivery transactions.
It also claims to have clocked a substantial 267% increase in new users in the period.
The growth puts the company in good stead in its vision to become Indonesia’s largest non-banking financial institution.
OVO started life in 2017 as a product of the Indonesian conglomerate Lippo Group’s venture builder. It has since received investments from SoftBank-backed Grab and e-commerce unicorn Tokopedia, another SoftBank portfolio company.
Having worked its way to become the country’s leading e-payment startup, OVO started diversifying into other fintech services in 2019. The company acquired local fintech startup Taralite to venture into lending last year, and also took a stake in Bareksa to foray into mutual funds.
More recently, in June this year, it forged a partnership with insurance firm Prudential Indonesia to provide premium-free personal accident death and a COVID-19 cover, accessible via the OVO app. It has also partnered with several consumer-facing startups, helping it enroll 115 million app users and over 700,000 merchant partners as of today.
Going forward, Thompson says OVO’s goal will be to address the gaps in Indonesia’s financial ecosystem, where the population is becoming more open to, and reliant on, digital services
“We hope that the financial landscape in Indonesia becomes less fragmented during COVID-19 and beyond,” said Thompson. “2020 and 2021 will be years of expanding financial services platform to address more unmet needs in the market like digital insurance, investments, lending, and furthering access of these services to unbanked and underbanked consumers and businesses,” he added.
The Indonesian payments space, however, is not a one-horse race.
Rival GoPay, too, harbours dreams of being a one-stop platform for financial services. GoPay rolled out various fintech services including lending (through a partnership with Mapan which started in 2017), insurance (along with Pasarpolis in 2018), and investments (teaming up with Pluang earlier this year).
Both OVO and GoPay claim to be the number one mobile payment platform in Indonesia, basing their claims on different surveys.
While OVO was reported to have reached the $1 billion valuation mark last year, GoPay entered the unicorn club this year, filing documents obtained by DealStreetAsia revealed.
GoPay had been raising funds on a standalone basis since March 2020. Its investors, the filings showed, include Temasek-affiliated Gamvest, Tencent Mobility, and Google Asia Pacific. In May, Facebook Holdings, PayPal, Pearl Valley Investments, and Altair Investments joined its roster of investors.
When asked about the strategic investments made by PayPal and Facebook into GoPay, Thompson said: “Recent high-profile investments in the digital payment ecosystem underscore unmet needs in Indonesia’s financial ecosystem. The need for greater financial inclusion has been reinforced by measures put in place due to the pandemic”.
While the firepower of investors, coupled with the freedom to run its own course, may put GoPay at an advantage, a rumoured merger between OVO and DANA could be a game-changer. DANA, backed by Ant Financial and Indonesian telecom major PT Elang Mahkota Teknologi (Emtek Group), is the No. 3 payments player in Indonesia.
News of a possible merger first surfaced in September when a Reuters report suggested that Grab was pushing for the deal, which will see it buying a majority interest in DANA and merging it with OVO.
A successful amalgamation is likely to make the merged DANA-OVO entity the top payment firm in Indonesia, some believe.
Thompson, though, said he is unable to comment on the market rumors. He only said OVO wants to “ensure that the merger prioritises national interest, is aligned with the government’s goals, fosters the nation’s e-payment industry, and adheres to rules and regulations, including data protection and taxation as well as obtaining the guidance and permission from [central bank] Bank Indonesia.”