1. FINTECH DEVELOPMENT AND ITS IMPACT
TO THE FINANCIAL SERVICES INDUSTRY IN
INDONESIA *)
Dr. Yunisyaaf Y. Arief, M.AppSc**)
A Subsidiary of IndonesiaRe
by :
*) Seminar Fintech, Oktober 2017, Universitas Sumatera Utara
**). Postgraduate Lecture at Perbanas Institute
2. I. What is it Fintech ?
The word "Fintech" is a short form of the expression of financial
technology. This word also has a meaning that tries to combine
between financial services and modern innovative technology that is
internet-based and oriented to the application (Kawai, Y. 2016)
In contrast to financial services companies, FinTech Company with their
unique business model and product offered, might be subject to different
legal types and regulatory obligations.
Fintech as a small-scale service provider with small-scale technology and
is a new player in financial services. Therefore, large technology
companies that has enter financial services long time ago such as "Apple
Pay", or other financial institutions as incumbents that increase their focus
on technology not included in the “ Fintech” company.
However apart from its common features compare to financial institution, it is
almost impossible to make a special definition for "FinTech”, although their
presence mostly are in a start up phase. In addition to, the presence of
FinTech companies are also means an opportunity for a large number of
investors to be active in funding activity via social media components
4. ➢B2B (business to business) example one supermarket
Information System (SI) conveys a message to a company
through a supplier’s SI;
➢B2C (business to consumer) internet sales over books,
airplanes, music etc;
➢C2B (consumer to business). Some addresses on the
Internet convey the offer of certain suppliers, so users can
make a selection of suppliers offer, and this is highly
dependent on the internet features available and
➢C2C (consumer to consumer). Auction site such as ebay,
allow customers to connect with each other, as do Amazon that
does the same to offer used goods (second book)
6. III. Why is FinTech being more dynamic ?
➢ Requires innovative, transparent and inexpensive financial services.
➢1. Decreasing confidence in the bank;
➢2. Minimum loan facility offered by the bank;
➢ 3. More bank focus on regulation implementation than technology;
➢ 4. Bank has a large, inefficient and inflexible infrastructure
➢ 5. The internet changes the way it interacts with money
FINTECH
a. Fact
Sophie Guibaud & David Meinhart (2014)
8. 38%
26%
10%
10%
5%
6%
Don't visit
Less than 1 visit per
month
1 visit per month
2 visits per month
3 visits per month
4 or more visits per
month
c. Customer Interaction Frequency with branch bank office
Source: David, W. (2017)
12. IV. Fintech Profile In Indonesia
Payment Lending
Agregator Others
Personal/Financial Planning Crowdfunding
18%
43%
POJK issuance No.77 / POJK.01 / 2016 About LMPUBTI or Peer-to-
Peer Lending Information Lending and Borrowing Service
FINTECH
Source : Indonesia Fintech Report 2016
13. 4
16
25
40
165
<2006 2006 2012 2014 2017
a. Number of Companies based on Fintech in Indonesia
Source: Fintech Indonesia & OJK
14. 2008 2009
2010 2011 2012
2013
USA ASIA EUROPA OTHERS
250
500
D
E
A
L
V
O
L
U
M
E
2.500
3.500
0 ($ Million)
I
N
V
E
S
T
M
E
N
T
b. Fintech deal volume & investment worldwide
Source: Accenture, 2014
16. a. So Insurance companies need to do ?
1. Commoditize insurance products and sell them online;
2. Conduct a review for cost efficiency across all distribution channels
So that will encourage savings for insurance
companies and also customers
17. b. Road Map FinTech
REMITTANCES
PERSONAL
FINANCE
CONSUMER
BANKING
RETAIL
INVESTMENT
INSTITUTIONAL
INVESTMENT
EQUITY
FINANCING
LENDING
BANKING
INFRASTRUKTUR
FINANCIAL
RESEARCH
PAYMENTS
19. Opportunities
1. The rapid growth of Fintech-based industry is an opportunity for the
financial industry, especially banks and insurance to encourage an
important part of their innovation process to the external party that is
Fintech (At the same time Commoditization of costs);
2. Cost sharing among peers will drive the de-verticalization of the value
chain, namely: separation of functions and services from vertically
integrated businesses. Companies that de-verticalize the value chain
can operate more efficiently and achieve better results by relying on
partners to perform some important functions rather than maintaining
control over the process itself.
3. Existence and rapid growth of such various companies as fintech
allows banking and insurance as the incumbent to exploits this
phenomenon as a "supermarket“ capability.
d. Opportunities and Challenges Of The FinTech Industry
20. 1. A rapidly growing phenomenon of the fintech-based industry
demonstrates the success of an institution in implementing a
flexible business model that has the ability to quickly
collaborate with other institutions. On the other hand, flexibility,
business model agility and fast collaboration capabilities are not
core competencies of banks or insurance as incumbent.
Challenges
2. The ability to "windows shopping" on the capabilities of fintech-
based companies is not limited to incumbent institutions; however,
newcomers can do so without any significant obstacles, this is a
reflection of the potential for an increasing level of competence in
the future.
21. 3. Extra Value Chain Disruption, the value chain participant traditionally
establish partnership directly with customer. Example: Reinsurance
company partnership directly with the insured and this makes the
company re-insurance competes with insurance companies rather than
partner;
4. Inter Value Chain Shifting, ie shifting to a different value chain and hence
occurs profit migration to new institutions. For example: Investment
Company offering similar trade products (exchange trade funds/EFTs)
which makes customers switch from savings to EFTs
5. Tehnological Value Bridge, is a new technology that simplify connections
with large and complex networks, so companies that focus on connection
payment services are disrupted. For example: Fintech-based service
companies offer convenience; make online payments, previously only
available to wholesalers.
22. e. RISK
Financial abuse by FinTech provider.
(Systemic Risk)
Technology provider security Failure
Money Laundering
23. Success
Fintechs has taken the initiative - defining the direction, shape and
speed of innovation in almost every sub-sector of financial services -
and has succeeded both as a stand alone business as well as an
important part of the financial value chain
Fintechs has changed customer expectations, setting a new
barometer higher than previous experience. Through the innovation
it has outlined, it encourages the processing of more loan decisions.
Failure
Understanding that develops as if customers are willing to switch
from the old player to the new player is something excessive,
because in addition to the high cost to make the switch, the new
innovations offered are often not significant enough to ensure a
transition to a new provider, on the other hand the player as
incumbents have been adapted to the new business environment
f. Success & Failure
24. VI. Financial Industry Strategy
Synergy with FinTech company for the purpose of:
1. To extend the market access;
2. To increase the cost efficiency;
3. To add more feature and capability on financial
4. service product;
5. To do customer segmentation based on demand
25. VII. CONCLUSION
The Influence of Fintech to Financial Services Industry, includes
Bank and Insurance are:
1. To encourage Financial Services Companies to be more efficient
2. To encourage innovation of financial products and services
3. Is a solution to the complexity in the Service Industry sector
4. Fintech based industry as a unique financial service is currently
developing their owned ecosystem which might not be the same
with the current stable financial services.
27. IX. References
Kawai, Y. (2016), General Secretary of the International Association of
Insurance Supervisors (IAIS) member organization of the Financial Stability
Board, offers a working definition of “FinTech” as follows: it is a
“technologically enabled financial innovation. It is giving rise to new business
models, applications, processes and products. These could have a material
effect on financial markets and institutions and the provision of financial
services.”
Indonesia Fintech Report (2016);
https://kupdf.com/queue/fintech-report
2016_59aac284dc0d601645568edc_pdf?
Sophie Guibaud & David Meinhart (2014) (Almost) everything you need to
know to start in Fintech, University College London.
Accenture (2014), The Boom in Global Fintech Investment, A new growth
opportunity for London.
BI Intelligence ( 2016) Five Ways Fintech Is Shaping The Future Of Financial
Services
http://www.businessinsider.com/5-ways-fintech-is-shaping-the-future-of-
financial-services-2016-5/?IR=T
David W. Helin and Stephanie Sadowski (2017) Banking on value, profiling
key survey highlight, Rewards,Robo Advice And Relevance, Accenture.
29. A. Personal Finance and Investment
Founded in 2010, NgaturDuit is an online-based online service provider for users to
plan and track their budgets and expenses. NgaturDuit works extra by offering users
of financial consulting services, supported by IARFC, the largest private finance
group planner in Indonesia NgaturDuit is a collaboration between two small IT
consultancy firms
30. Stockbit is an online investment community for Indonesian Stock Exchange
traders. Actions facilitate investors and traders to share ideas, insights, and
other financial information in real-time on social networks. Users can find ideas,
stock market data, media links and other financial information. Stockbit's base
value is allowing traders to make better investment decisions
Web site: Stockbit.com
31. Bareksa is an integrated investment portal. Launched in 2013 by PT Bareksa
Portal Investasi, this is the first to offer customers with data services and
investment tools, news and information, learning centers and the investor
community. Bareksa allows users to buy and sell mutual funds online and aims to
facilitate investment people.
32. Kartuku is one of the oldest electronic payment companies in Indonesia. Kartuku
is a Third PartyProcessor (TPP) and Payment Service Provider (PSP) that offers
hardware products such as payment terminals, network access equipment, and
card printers and encoders, and software solutions such as transaction
processing switches, Internet payment gateways, , and terminal path encryption.
B. Payment System
33. DOKU
Established in 2007, DOKU provides electronic payment processing,
online and in-mobile applications that allow any e-commerce merchant
to receive a wide range of online payment options from credit card to type
payment that appears. The company also launched the Wallet. Purse
itself to facilitate online transactions.
34. Veritrans or MIDTRANS is an online payment gateway, supporting e-commerce
Indonesia. Veritrans processing payment via credit card, direct debit, transfer
bank, Indomaret and Digital Wallet.
35. XENDIT is a mobile wallet that lets consumers pay for each other simply and no cost.
Xendit provides mobile payment for Southeast Asia
36. PadiPay is Payment Aggregator in Indonesia. Currently managing
partnerships with Bank-2 in Indonesia, including transfer, trade and Wallet
payments activities. PadiPay offers a wide range of flexible payment
channels designed specifically for customers
37. Tapp provides an innovative peer-2-peer exchange exchange network,
and allows people who do not have a bank account or credit card for
Make sales dynamically, to pay for goods & services via mobile
in a very good way
38. C. Point of Sale (POS)
Pawoon is a Point of Sales (POS) application for Small and Medium
Enterprises (SMEs). Pawoon helps SMEs become more efficient and
productive in running their business, providing platforms that give them
tools to grow.
39. Moka is a mobile point of sale (POS) start up technology in Jakarta,
Indonesia. Supported by East Ventures and Wavemaker, Moka provides
POS solutions and end-to-end payments that empower small and medium
sized businesses in Indonesia
40. D. Lending
MODALKU was established in 2016, and is a new market for peer-to-
peer (P2P) loans to be granted Small and medium-sized businesses
in Indonesia (SMEs) greater access to funding through loans
collected from crowdfunding
41. E. Accountancy
JURNAL is a technology company that provides web-based accounting
solutions for small and medium sized companies. The administration
process is simpler
42. F. Comparison
CekAja is a comparison site for financial products focusing on accuracy,
security, and simplicity. The portal compares personal loans, credit
cards, deposits, and sharia. CekAja also offers comparisons for
mortgages, vehicle financing, vehicle insurance, property insurance, life
insurance, and product electronic insurance, and helps customers apply
for related services
43. G. Crowdfunding
MAPAN is a service provided by Ruma startup Indonesia, basically a
digital Crowdfunding Platform that allows users to purchase and
manage payment groups
44. Kitabisa is a crowdfunding platform that loves social projects,
as well as projects in technology, creativity, and business categories
45. H. Cryptocurrency
Quoine is an advanced Bitcoin trading platform that offers margin
trading and also trading in a number of currency pairs. QUOINE is a
leading fintech company that provides next generation trade, exchange
and financial services and is supported by blockchain technology.
Through its offices in Singapore, Japan, and Vietnam, QUOINE
combines a strong local partner network with extensive team
experience in banking and financial products to deliver leading-class
financial services
