The Asian Banker’s survey across financial institutions in South East Asia showed that in four out of six markets, banks are surpassed by disruptors in customer acquisition. Institutions increasingly realise the need to move towards customer centric services with 50% of the banks saying that they want to be more like a technology or platform company.

 One country in this region that is witnessing a rapidly growing fintech sector is Indonesia, although the country has some glaring market inefficiencies. Seventy-four percent of micro, small and medium enterprises (MSME) in this archipelago do not have access to finance and 50% of the adult population is unbanked. The mobile penetration is however high with 69% of unbanked segment having mobile access. Regulatory frameworks is in place and the market is ripe with unique opportunities for fintech growth, especially in payments, lending and mobile-based services.

Key fintech trends and opportunities in Indonesia

Indonesia is a growing fintech market with an estimate of around 450 fintechs, yet well behind regional leaders India with over 2,500 fintechs, and China with around 1,900 fintechs. Payment and lending are the two most dominant sectors that have seen the largest fintech growth. Not surprising as the country is characterised with a large underserved segment population. 

“Indonesia has a unique characteristic of having majority in low income segment and over 90% is micro enterprises, so you can develop a business model specially catering to that segment. There is still big enough opportunity to leverage on fintech. How do you convert with small mom and pop shops to be able to introduce finance to them and work together with other financial institutions?” pointed out Melisa Irene, partner, East Ventures.

She added that there are big opportunities for investments in Indonesia. “Indonesia has a huge working-class segment of that majority, about 60% ...

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