• In the last two decades, Indonesia’s financial
industry has shifted due to the fast technology
growth and development.
• From traditional financial system (bank driven), to the
financial technology (consumer driven), it enables
While there is no clear definition about fintech,
Bank Indonesia defines it as:
“A phenomenon of fusion between technology and financial
features that transform business models and a weak barrier to entry which lead to raises unregulated players to run the service as well as regulated financial institutions.”
• Indonesia’s Fintech Association (IFA), established in 2015, was able to map more than 120 fintech players as of today.
• Indonesia Financial Service Authority is expected to release a new regulation (POJK) specifically for off balance sheet (marketplace) lending by December this year. On the other hand, Central Bank (BI) has launched BI Regulation on Payments Transaction Processing (PBI PTP) this early November to provide legal assurance for new and existing FinTech payments business activities. They also has created a FinTech Office that is aimed to encourage innovation to local FinTech startups by virtue of, among others, capacity building and the implementation of regulatory sandbox.
This report is a curated and an aggregated
information on
Indonesia’s Fintech scene in
2016, designed to help both local and foreign
entities to obtain better understanding on local
• This report consists of three segments:
– In collaboration with the Indonesia’s Fintech Association, we
curate and aggregate the information about local fintech
players and their respected area in Indonesia.
This
informations are only focusing on a non-bank and non-telco
companies.
– Survey added, in collaboration with JakPat, we are seeking
for awareness of fintech services using 1000 respondents.
– DailySocial and Indonesia’s Fintech Association analyze and
CONTENT
• Market Overview
• Indonesia’s Fintech
Landscape
• Investment Landscape
• Consumer Awareness
• Indonesia Fintech
Challenge
• Conclusion
GENERAL MARKET OVERVIEW
• As the world’s fourth most populous nation and the largest
economy in Southeast Asia, Indonesia has charted an
impressive economic growth since overcoming the Asian
financial crisis in the late 1990s.
• The country’s gross national income per capita has
steadily risen from $560 in the year 2000 to $3,374 in
2015. The GDP in 2015 has reached 861.934 billion USD.
• Boston Consulting Group (BCG) in 2013 has predicted that middle-class and affluent consumer (MAC) socioeconomic category will begin to ramp up their spending in key segments such as home goods, vehicles, consumer durables, and financial services.
• They said the number of MAC will be doubled by 2020, from 74 million in 2013 to roughly 141 million people. During that period, some 8-9 million people will enter the middle class each year.
GENERAL MARKET OVERVIEW
INTERNET & MOBILE MARKET
• Today, the number of internet users in Indonesia
has exceeded over 100 million (APJII: 132.7
million).
– 51.8% are male and 48.2% are female
– 65% internet users are from Java Island
– 24 million Internet users are in 25-29 age range
• 326.3 million mobile subscription (126% population)
DEVICE USED
+41%
In 2016, the share of web page views
from Desktop & Laptop only reach 28%.
Year-on-year it’s decreasing by 41%.
While Share of web page views from
Mobile Phone reach 70%.
Year-on-year it’s increasing up till 41%.
When in come to tablet, share of web
page views only reach 3%.
Year-on-year it’s decreasing by 31%.
Source: We Are Social
70% -41% 28% -37% 3% Desktop & Laptop Mobile Phone Tablet
AVERAGE TIME SPENT
4.42
3.33
2.51
2.22
PC or Tablet Mobile Phone Social Media via Any Devices
Television
Source: We Are Social
• By time spent, Indonesia’s people still spend a lot of time on PC or Tablet. Average daily use of the internet via PC or Tablet is 4 hours and 42 minutes. • For Mobile Phone, the average daily use of the internet is 3 hours and 33
minutes.
• As for Social Media, the average daily use is 2 hours and 51 minutes and lastly, for Television is 2 hours and 22 minutes.
FINTECH MARKET
• Only 36% adults in Indonesia have an account at the formal financial institution. • The penetration of bank branches per 100K population is only 1/6 of the
penetration in European countries. • 49 million SMEs unit not yet bankable.
• There are Rp 988 trillion gap financing the development. • P2P lending is still under Rp 150 billion.
• The share of new credit to GDP is still 34.77% (bank). It reflects a huge market potential that can be targeted by fintech (P2P lending), without having to erode banks’ market share.
FINTECH MARKET (2)
• 50% people send remittances through banks.
• 44% people borrow money from friends & family
members.
• 27% people save money in their bank account.
• 9% people use credit cards for payments.
FINTECH IS NOT A NEW
PHENOMENON
FINTECH IN INDONESIA
Conventiona l Financial Institutions [Bank] Fintech 2.0 Joint Venture Financial Institutions & Tech Company Fintech 2.5 Independent technology company [Startup] Fintech 3.0• Indonesia’s fintech today are growing to fintech 3.0, where many independent tech companies (startup) joining the financial market.
• Because many new players are emerging, Indonesia’s Fintech Association then established in September 2015.
• The vision is to be a reliable partner to realize Indonesia’s fintech ecosystem, from Indonesia companies for Indonesia people.
FINTECH PLAYER GROWTH
7% 6% 9%
78%
2006-2010 2011-2012 2013-2014 2015-2016
• With the fast pace development of Indonesia’s tech
ecosystem, fintech sector also feel the impact and 2015-2016 was the best year for fintech industry’s growth in Indonesia so far.
• According to Indonesia’s Fintech Association, the growth of fintech players detected for the past two years reach 78%, the highest number so far
NUMBER OF FINTECH PLAYERS
IN INDONESIA
• By November 2016, Indonesia Fintech Association
(IFA) has listed Around 135-140 fintech players.
135-140
• By November 2016, there are 55 fintech players
registered as a full member of the association.
• 41 fintech 3.0 and 14 fintech 2.0
55
Source: Indonesia’s Fintech Association
FINTECH PLAYER PROFILE BY SECTOR
Payment 43% Agregator 13% Lending 17% Personal Finance Planning 8% Crowdfunding 8% Others 11%• Based on IFA data, 43% of the fintech players in Indonesia are playing in
payment sector, from mobile payment to payment gateway company.
• E-commerce growth plays major part for this condition
INDONESIA FINTECH PLAYER
Group Indonesia Fintech Player
Account Aggregator
VeryfundAgent Network
RumaAsset Management
FidigoBanking Support
KanopiCapital Market
StockbitINDONESIA FINTECH PLAYER
INDONESIA FINTECH PLAYER
Source: Indonesia’s Fintech Association, Crunchbase, DailySocial, Tech in Asia
Group Indonesia Fintech Player
Payment
Group Indonesia Fintech Player
INDONESIA FINTECH PLAYER
FINTECH INVESTMENT OVERVIEW
• In 2016, many fintech startups emerged in Indonesia. The growth reaches 78% per IFA data.
• Approximately 12 local capital owners invested in fintech startups and it includes funding to fintech startup outside Indonesia.
• On the other side, approximately 20 foreign investor firms invested to fintech startup companies, either local or foreign startup which want to expand its market.
• Furthermore, we listed 4 angel investors invested to local fintech startup and one IPO funding.
DISCLOSED AMOUNT OF FUNDING
• While most startups and capital owners choose not to
disclose the number, we found out that the total
disclosed amount of funding in 2016 for fintech startups
has reached around Rp 486.3 billion.
• The investment number include IPO funding and funding
from parent company outside Indonesia.
FINTECH STARTUP FUNDING LIST (1)
Source: Crunchbase, DailySocial, Tech in Asia
FINTECH STARTUP FUNDING LIST (2)
Startup Series Capital Investor Others
Series A Rp25,8 Billion
Local: East Ventures, Convergence Ventures Foreigner: Wavemaker Partners, Northstar Group Seed Undisclosed Local: East Ventures
Foreigner: 500 Startups Expand to ID: 2016 Seed Undisclosed Local: East Ventures
Foreigner:
Series A Rp100 Billion
Local: Alpha JWC Ventures Foreigner: Sequoia India, Harvard
Fund went to
Funding Societies; parent company Modalku
Undisclosed Rp201,6 Billion Local:
Source: Crunchbase, DailySocial, Tech in Asia
Source: Crunchbase, DailySocial, Tech in Asia
LIST OF LOCAL INVESTOR
8 2 2 1 1 1 1 1With eight investment activities in 2016, East Ventures is the most active local
venture capital who pour funds into fintech startups in Indonesia.
LIST OF FOREIGN INVESTOR
On the other side, 500 Startups is the most active foreign VCin Indonesia’s fintech ecosystem, with 3 investments this year.
The portfolio are: iGrow, finAccel (Kredivo), and Kudo.
The others VCs:
Jungle Ventures, Wavemaker Partners, Northstar Group,
Sequoia India, European Funds, Beenos Plaza, Singapore Press Holdings, IMJ Investment Partners, Fenox Venture Capital,
Golden Gate Ventures, Telstra Ventures, Jasrag Investments, Altitude Partners, CaptiiVentures, Monk’s Hill Ventures,
Perle Ventures, tryb Capital, Aura Funds Management, 2W Group, Azmi Global, Quest Ventures
INVESTMENT TO FOREIGN FINTECH
STARTUP INVOLVING LOCAL INVESTOR
Local Investor Others Startup Series Capital
MDI Ventures
GMO Investment Partners Jepang, Wavemaker Partners, & Co-Founder Skype Toivo Annus
Red Dot Payment Undisclosed Undisclosed
SMDV SBI Investment, Golden Gate
Ventures, Ascend Money Omise Seri B $17,5 Million
Celebes Capital
Nullabor, Anfield Equities, NTT DOCOMO Ventures, Tuas Capital Partners, Steve Melhuish, DMP VC
Jirnexu Seri A $3 Million
Lippo Group - Call Levels Seed Undisclosed
ANGEL / INDIVIDUAL INVOLVED IN
INDONESIA’S FINTECH STARTUP
INVESTMENT ROUND
• Amar Goel: Chairman of the Board of Directors at PubMatic
• Jerry Yeu: Investment Director at Hawksburn Capital
• Mathieu Harding: Director at Hawksburn Capital
NO LOCAL ANGEL THIS YEAR
Unfortunately, no (disclosed) local angel investors
involved in fintech sector this year. In 2015, we
recognized ANGIN (Angel Investor Club) had made
investment into two fintech players, Taralite and
Kitabisa.
POOLED FUND IN 2016
Investor Name Capital
Kejora Group Rp 1,08 Trillion 500 Startup SEA Rp 650 Billion
KK Fund Rp 5,2 - Rp6,5 Billion / startup [$400-$500,000]
Gobi Partner & MAVCAP Rp 188,5 Billion MDI Ventures Rp 300 Billion Mandiri Capital Rp 200 Billion Unitus Impact Rp 600 Billion Golden Gate Ventures Rp 800 Billion
CONSUMER AWARENESS SURVEY
ON FINTECH
• To have better understanding on consumer awareness on
fintech, we’ve conducted a survey using the JakPat
platform.
• 1000 respondents are involved, with 51.05% are Female
and 48.95% are Male.
RESPONDENTS RESIDENCY
Jakarta 35.08% West Java 28.70% Central Java 15.91% East Java 20.31%RESPONDENTS
AGE
<16 y/o 0.00% 16-19 y/o 2.70% 20-25 y/o 43.34% 26-29 y/o 22.92% 30-35 y/o 21.92% 36-39 y/o 6.01% 40-45 y/o 2.90% > 45 y/o 0.20%From Age point of view, most
respondents are the millennial generation with 20-25 age
group as the
FINANCIAL ACCESS TO BANK /
HAVING BANK ACCOUNT
Yes 86.93%
No 13.07%
Since majority of
respondents live in Java
and in an urban area,
86.93% of them have
access to financial
activities or have bank
account.
HAVE YOU EVER HEARD “FINTECH”?
Yes 28.34%
No 71.66%
WHAT DO YOU KNOW ABOUT FINTECH?
36.13%
24.95% 20.06%
18.86%
Financial services empowered by technology
A phenomenon between tech and financial that transforming traditional financial business model Startup technology in the financial sector
Other
• For those who know or ever heard of the word “fintech”, 36.13% of them defined it as Financial service to empowering technology.
• 20.06% of the respondents
associate it with the tech startup who focusing the services on financial sector.
DO YOU USE FINTECH SERVICE RIGHT NOW?
Yes 18.46%
No 81.54%
Only 18.46% respondents in this survey said they already used a fintech service.
WHICH SERVICE DO YOU USE?
Owned by Bank 81.08% Non-Bank 10.27% Both at the same time 8.65% • For those who use thefintech services, 81.08% said they use fintech services owned by bank. • 10.27% used Non-bank
fintech services, 8.65% use both.
POPULAR NON-BANK FINTECH SERVICE
42.86% 17.14% 11.43% 11.43% 11.43% 8.57% 8.57% 5.71% 5.71% 2.86% 2.86% 2.86%When it comes to popularity, Doku stands out as the most popular fintech player among the respondents with 42.86%.
TOP REASON FOR USING FINTECH SERVICES
71.35% 49.19% 47.03% 36.22% 21.62% 11.89% 3.24% Easy to use No need to come to the bank Saving time More secure and practical To manage finances better Higher return than banking product Others• For the respondents in this survey, the top reason to use fintech services is that its “easy to use” with 71.35%.
• Followed by “no need to come to bank”, “saving time”, and “more secure”.
DO YOU THINK FINTECH CAN PUSH BETTER
FINANCIAL LITERACY AND FINANCIAL
INCLUSION IN INDONESIA?
Yes 74.47% No 25.53% 74.47% respondents believe that fintech can help pushing the idea of better financial literacy and financial inclusion inTHE CHALLENGE
Based on survey by Deloitte Consulting and Asosiasi
Fintech Indonesia (2016), fintech players in Indonesia
feel that Indonesia’s fintech sector:
(a) need a clearer regulation, (b) have more collaboration,
(c) lack of talents, and
REGULATION (1)
60.90% 58% 56.50% 56.50% 53.60% 49.30% 46.40% 26.10% 2.90% Payment Gateway E-Money or E-Wallet Know Your Client P2P/ Online Lending Digital Signature Data Security Selling Financial Product…Cloud Service Others
Based on data gathered by Deloitte Consulting and Asosiasi FinTech Indonesia, area with the highest demand for increased or clearer regulation are Payment Gateway (60.90%), e-money/e-wallet (58%),
REGULATION (2)
Based on survey by Deloitte Consulting and Asosiasi
Fintech Indonesia (2016), almost half of fintech
players (49%) feel that current regulatory process is
slow and 61% of them feel that regulation in
REGULATORS
• The lack of the clearer regulation has been responded by Indonesia government and they promise by the end of the year there will be clearer regulation for
fintech.
• Basically, there are three institution which have authorities to make the regulation for fintech:
Bank Indonesia (BI)
•Processing payment
transactions and wallet / electronic money
•Data Security
•Financial System Stability (SSK) •Monetary
•Consumer Protection •Basically, every regulation
related to banking
•Etc…
Financial Service Autorities (OJK)
•Data Security •Digital KYC •Digital Signature
•Online lending Regulation •Consumer Protection •Basically, every financial
activities related to non-banking institution
•Etc…
Ministry of Communication and Informatics
•Data Security •Digital Signature •Consumer Protection
•Basically default issue in tech
company
IN SHORT…
OJK
FinTech 2.0 (digital banking, InsurTech, FinTech in capital markets, venture capital, and
online financing)
FinTech 3.0 (independent technology companies and
startups)
BI
Card based Payment Instrument (APMK), E-Money, Money Telco,
Blockchain (Bitcoin)
National Payment Gateway (NPG)
REGULATORS
• OJK outlines two fintech classification that will fit into OJK
supervision. Both will have to comply with any rule made by the OJK and by the end of the year OJK plans the regulations (POJK) for fintech.
• The two fintech categories:
– Fintech 2.0 & Digital Banking. Encompasses three areas: banking, capital markets, and non-bank financial industry (IKNB).
– Fintech 3.0-3.5, startup companies: Specialized set of non financial services institutions (LJK).
FINTECH CATEGORIES
• Banking: E-banking, Financial Services in the Office Without Inclusive Financial Framework (Smart Code), Digital Branch, and Banking Anywhere (Omni channel).
• Capital market: E-stocks, Bonds, Mutual Funds, and Trading • IKNB: E-Pawn, E-MFIs, E-Guarantee, and E-Insurance
FinTech 2.0: digital banking, InsurTech, FinTech in capital markets, venture
capital, and online financing
•
• Cooperative, Futures Exchanges, and loan-based crowdfunding (P2P Lending)
FinTech 3.0:
independent technology companies and startups
BANK INDONESIA
• Bank indonesia will regulate card based payment tool
(apmk), e-money, money telco, blockchain (bitcoin), and
the national payment gateway (npg).
• Furthermore, BI has launch two initiatives:
– Bi fintech office (bi-fto) which implements the regulatory sandbox.
– Regulation regarding the implementation of the payment transaction processing (pbi ptp).
REGULATION / INITIATIVES, IN SHORT (1)
• Launch POJK by the end of the 2016 • Mainly will regulate fintech lending and
payment (P2P lending, etc…) • Also data security, consumer
protection, etc…
REGULATION / INITIATIVES, IN SHORT (2)
• Launch BI FTO with regulatory sandbox initiative.
• With sandbox, not all of the fintech player can join BI-FTO. It will
play the role as laboratory to test the business model and product before enters into a full licensing regime.
• Restrictions are given in the form of limited licensing to the
service, time period, or holding area.
• PBI PTP regulate ownership structure of service providers and had
two subjects:
• Payment system service providers: the parties responsible for
the stages of the authorization, clearing, and settlement like switching providers, payment gateways, and electronic wallets are required to have license from BI
• The parties that support payment transactions such as card
providers, ATM, EDC, and data center
• Also regulate the minimum fintech ownership , which is 80%
owned by the person or legal entity locally.
TALENTS NEEDED
83% 67% 90% 0-2 y/o Companies 3 y/o Companies > 4 y/o CompaniesRisk Management Back end Programming Data and Analytics As companies grow,
their need of talents will change.
Younger company have greater need for Data and
Analytics talents, but companies that have been
operational for longer duration have greater need in Risk
Management talents.
• While in 2016 Indonesia experience fast growth of fintech
ecosystem, there’s a challenge in the regulation.
• Most fintech players feel that the regulation in Indonesia still
in grey area. They’ve requested the authorities to create
clearer regulation. What this sector needed most is Payment
Gateway.
• The authorities responded well. OJK will launch POJK which
will be focusing on regulating the fintech payment and
lending sector. BI already launch two initiatives, BI-Fintech
Office and PBI PTP.
• At least 19 investment activities in fintech sector in Indonesia
• East Ventures is the most active local ventures in fintech area.
500 Startups is the most active for foreign VC.
• Total amount of disclosed investment in 2016 reaches
Rp 486.3 billion.
• Consumer awareness to fintech services is still low although most
live in urban area.
• Yet most of them believe that fintech can help to push on better
financial literacy and financial inclusion in Indonesia.
• Doku is the most popular fintech startup in Indonesia, according
to respondents.
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