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DailySocial Fintech Report 2019

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DailySocial Fintech Report 2019

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DailySocial Fintech Report 2019

  1. 1. MOVING TOWARDS A NEW ERA IN INDONESIA'S FINANCIAL INDUSTRY FINTECH REPORT 2019 © NOV 2019
  2. 2. PREFACE Fintech Report is DSResearch's annual report to provide updates on the financial technology industry in Indonesia. In this report, we focus on: Fintech has evolved in significant ways and continuously become more mature at an accelerated pace over the course of 2019. This year, the demand of fintech products had grown rapidly and achieved mass adoption to people’s lifestyle. With big developments ranging from the rise of fintech products awareness up to fintech’s impact on national GDP has become another big year for fintech. Fintech Report 2019 is based on a nationwide survey encompassing responses from 1500 people in nationwide. Questions sought to yield perspectives of usage and attitude in public acceptance towards fintech products and also exploring the emergence of growth and trends in the financial industry. It sheds light on the impact which fintech ecosystem will have on all the stakeholders, the challenges and concerns that all sectors will face, and the emergence of new businesses and monetization models in this space. This report is conducted by DSResearch and supported by BRI & BRI Ventures to gain more insights on fintech’s overview in 2019. The fintech industry dynamics and its ecosystem overview in 2019. Industry perspectives towards fintech growth, trends, and regulations in 2019 Public acceptance of usage & attitude by fintech products. Prospective strategy of fintech in upcoming years 1. 2. 3. 4.
  3. 3. Bank Rakyat Indonesia (BRI) is one of the largest state-owned banks in Indonesia. It’s founded in Purwokerto, Central Java, by Raden Bei Aria Wirjaatmadja on December 16, 1895. The strength of BRI lies in serving the segment of micro and small medium enterprises. BRI’s vision is to provide financial services to all Indonesians nationwide, including the remote areas. To realize this, it needs to be supported by sufficient infrastructure, including network of branches and branchless agent throughout the archipelago. As the market keep growing, along with its commitment, BRI keeps innovating to provide the best services to its customers. Getting through digital era, BRIAPI, a BRI’s product, serves to enable third parties to use Bank BRI’s financial service functions or features into their platforms in a secure and safe manner. With BRIAPI implementation, Bank BRI is the first bank with open API system in Indonesia that has ISO 27001 and OJK certification. BRIAPI is expected to link Bank BRI and ever-growing startup industry, in particular to extend digital collaboration in realizing a super ecosystem to accelerate financial inclusion and to bring ease of access of financial services to society. With this, we believe, “No one left behind!” BRI Ventures is the Corporate Venture Capital arm from Bank BRI, the largest bank in Indonesia. It is established to accelerate innovation and give support to Bank BRI by investing in high-growth companies with strong digital ecosystem-enablement angle. Supported by the network and reach of its holding company, BRI Ventures is uniquely positioned in the market to help entrepreneurs get a strong local presence, by building its business with real value creation, and eventually drive Indonesia’s digital economy.
  4. 4. 01 04 08 45 48 15 PREFACE CONTENTS PART 2 PART 4 CLOSING REMARKS PART 3 PART 1 INTRODUCTION PUBLIC PERSPECTIVES FINTECH ECOSYSTEM IN INDONESIA 05 01 03 CONTENTS PART 1 INDUSTRY PERSPECTIVES PROSPECTIVE STRATEGY GROWTH AND TREND INDUSTRY DYNAMICS REGULATIONS IN 2019 FINTECH FUNDING FINTECH IN (NEAR) FUTURE IMPACT ON ECONOMY GROWTH 48 47 DEMOGRAPHY BANKED AND UNBANKED SOCIETY FINTECH'S PUBLIC PERCEPTION FINTECH PRODUCTS' AWARENESS AND USAGE 16 18 19 21 09 10 11 13
  5. 5. 05 PART 1PART 1PART 1 INTRODUCTION
  6. 6. 05 Fintech Ecosystem in Indonesia The financial technology (fintech) in Indonesia offers a broad variety of financial services, including transaction settlement, capital raising, investment management, fundraising and distribution insur- ance, market support, equity crowdfunding, and other financial support and service activities. This year, the scene is still highlighted by lending and payment companies. The OJK (Indonesia’s financial services authority) has listed more than 100 licensed fintech lending companies as of early this year, and the number is expected to grow throughout the year. OJK also maintains various services related to digital insurance, investment, and crowdfunding; while payment and remittance are regulated by Bank Indonesia. The e-money apps are currently super popular to facilitate many payment activities, from shopping, entertainment, to transportation. The introduction of QRIS to unify mobile payment transaction in 2020 will play a bigger role to shift Indonesia to be a cashless society. We have witnessed OVO, a leading payment company, to be the first unicorn startup coming from fintech vertical. We expect some lending companies to follow in the near future. In the bigger picture, 99 million unbanked people, according to the e-Conomy SEA 2019 by Google, Temasek and Bain & Company, is a huge opportunity for digital financial services to help the govern- ment in financial inclusion issue. The research also shows the projected growth in digital financial services in the region. 2019 2025 SEA Consumer Payments (GTV, $B) e-Wallets Digital Payments Consumer Payments 114B 1,100B 2,300B 22B 114B 600B 1.400B 1.100B 2.300B Digital Remittance (Flows, $B) Digital Lending (Loan Book, $B) Digital Investments (AUM, $B) Digital Insurance (GWP, $B) Digital Remittance (Flows, $B) Digital Lending (Loan Book, $B) 11B 23B 110B 10B 75B 2B 8B 28B Digital Investments (AUM, $B) Digital Insurance 13% 3% 8% 3% 11% 4% 9% 28% (GWP, $B) 2019 2025 source: e-Conomy SEA 2019
  7. 7. 06 Fintech is considered to be as a result of the massively developed information and communication technology infrastructures in the country during the last decade. Currently only around 60 percent of Indonesia’s adult population have conventional banking accounts, while around 130 million Indonesians use mobile phones to access the Internet. Fintech, especially lending, has been arguably the fastest growing sector in recent years. The Indonesian Finan- cial Services Authority (OJK) recorded the total financing channeled by technology-based lending service providers as US$951 million in the first three quarters of 2018, and projects the total loan figure to grow to US$2 billion by the end of 2019. Among the startups that received massive investments in 2018, three belong to this sector. These include FinAccel (Kredivo) with US$30 million in Series B funding, C88 with US$28 million Series C round, and Moka with US$24 million in Series C funding. Aside from P2P lending, digital payment services also hold promise in Indonesia. A study by MDI Ventures and Mandiri Capital entitled “Mobile Payments in Indonesia: Race to Big Data Domination” predicts that the mobile payment market will reach US$30 billion in total gross transaction value by 2020, and reach a compound annual growth rate of 158% for the period between 2016 and 2020. TYPE OF FINTECH source: Indonesia Fintech Association (2017) Total (US$15 Billion) 100% Payment 32% Lending Others 16% 15% Investment Point of Sales (PoS) Crowd funding 17% 11% 9% This gap obviously encourages startup entrepreneurs to take advantage of those untapped opportunities. Initially, the emerging fintech business was expected to be an initiative capable of harmonizing financial inclusion in Indonesia through expanding access, reducing costs, and increasing efficiency. Slowly, fintech appears and currently are considered to be commonly following this disruptive pattern. They come with products and services that continuously improved and expanded beyond their scope. There are some slightly different data, but both show the large amount of fintech transactions in Indonesia, at around US$15 billion in 2017. Of that number, most of them are engaged in the payment sector, followed by investment and lending.
  8. 8. 07 The main sectors exposed to this risk at the moment are financing and funding. It might not be surprising if conventional banking will eventually only be a kind of ‘cashier’, while other products and services are offered by fintech due to their flexibility and efficiency in operational activities. In 2019, fintech is expected to remain at the forefront of Indonesia’s digital industry, with the potential of collaborations with financial institutions. Fintech players will also need to form partnerships with merchants of various sizes, from small and medium enterprises (SMEs) to big businesses, to facilitate wider adoption. Insurance and wealth management also hold potential for fintech applications, as many Indonesians currently do not have insurance coverage of any form. Fintech ecosystem itself has been growing massively this year. OVO has emerged as the first unicorn among fintech companies. Some other players, like Akulaku, Kredivo, and Modalku also have high valua- tions at more than US$100 million. That indicates optimism and trust from investors about the potential of the industry landscape. Signals of collaboration between players, traditional and digital, are becoming apparent today — fintech acts to educate the market, unbankable society about various financial products. In addition to OJK, Bank Indonesia is also being a key regulator in the ecosystem. It initiates QRIS (Quick-Re- sponse Code Indonesia Standard) as a first step to create synergies among digital payment platforms. This policy allows one access code to receive payments from various types of registered applications. “Fintech is generally carried out by startup companies, although this is not always the case. In addition, not infrequently large companies, including conventional banking and financial services, also invest in existing fintech businesses. Thus, while the technology provides the opportunity to disrupt the market, we have to question the potential for fintech to really fundamentally change the business and economic landscape.” — Riemer et al., 2017
  9. 9. PART 2PART 2PART 2 INDUSTRY PERSPECTIVES
  10. 10. For more information, download "Fintech Report 2019" fo free Click here to download https://dailysocial.id/report/post/fintech -report-2019

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