Burgeoning Digital Finance Industry in Indonesia Anticipated to Generate $8.6 Billion by 2025
Indonesia is rapidly emerging as one of the fastest growing fintech markets in Southeast Asia. With over 243 fintech startups operating in the country, it's clear that digital finance is becoming an integral part of the Indonesian economy.
These startups span various segments, including personal finance, insurtech, and blockchain. The surge in fintech companies is partly due to the country's booming e-commerce market, projected to reach US$26.9 billion by 2020.
Local banks in Indonesia have also embraced digital strategies. Traditional banks have reported a 10% month-on-month increase on their mobile banking channels alone. Larger institutions have set up fintech-focused venture capital funds and formed fintech incubators.
The Official Financial Services Authority (OJK) has approved 126 fintech companies in Indonesia. E-money transaction volumes in the country increased by 11.8 times between 2017 and 2019, reaching IDR 145 trillion (US$9.8 billion).
Since the COVID-19 pandemic began, there has been an unprecedented surge in digital services, and an increase in the registration of digital banking accounts in Indonesia. By 2025, digital financial services revenues in Indonesia are projected to reach US$8.6 billion.
Lending and payments currently dominate the domestic fintech ecosystem, accounting for 61.4% and 19.3%% of firms respectively. P2P lending volumes in Indonesia grew from IDR 2.56 trillion (US$173 million) in loans disbursed as of December 2017 to IDR 95.4 trillion (US$6.4 billion) as of February 2020.
GoPay, Ovo, DANA, and LinkAja are leading players in the digital wallet space in Indonesia. Online lenders in the country are seeing a significant rise in demand, as reported by the Jakarta Post. However, only 25 out of over 1,000 active peer-to-peer (P2P) lenders in Indonesia have been granted a license by the OJK.
For more information about the fintech scene in Indonesia, you can contact the Swiss Business Hub Indonesia. The Head of Swiss Business Hub Indonesia is Wolfgang Schanzenbach, who can be reached at +41 58 480 38 55 or +62 811 870 9013. Feranica Susanto, a Senior Trade Officer at the Swiss Business Hub Indonesia, can also be reached at +41 58485 0466 or +62 812 953 7355. The Swiss Business Hub can be contacted at the Embassy of Switzerland in Jakarta, Indonesia.
In 2019, digital banking penetration in Indonesia increased by 1.6 times, according to McKinsey. The Head of Swiss Business Hub Indonesia, Wolfgang Schanzenbach, emphasises the potential for further growth in the Indonesian fintech market, particularly as the government continues to support and regulate the industry.
