The fintech players putting Indonesia on the map

It’s impossible to discuss Indonesia’s fintech sector without mentioning the archipelago’s burgeoning peer-to-peer (P2P) lenders that make up more than half of the country’s total number of fintech companies, according to one account.

While P2P lending is often confused or used interchangeably with crowdfunding, we’ve distinguished both for the purpose of this landscape map. We’ve defined P2P lending as when a loan from a consumer is used to fund another consumer, entrepreneur, or business. There’s also equity crowdfunding, in which a lender lends money in exchange for shares in a company.

Last year, fintech companies in Indonesia attracted US$515 million in fundraising, a slight decrease of 10.9% from the year before. Lending companies made up about half of that amount.

Indonesia’s lending companies have grown as consumers and many small businesses fell on hard times in the past year. As of October 2020, the total number of new loans disbursed by Indonesia’s online lenders had increased by 24% year on year to hit 56.16 trillion rupiah (US$3.9 billion), according to data compiled by the country’s Financial Services Authority (OJK). Rising non-performing loans, however, could pose a risk down the line.

P2P lenders continue to attract some of the largest investments in the country. Between 2018 and 2020, Akulaku attracted US$170 million, FinAccel bagged US$240 million, while Koinworks raised over US$60 million.

It’s not just the lending sector that has seen a boost, however. Across Southeast Asia, usage of mobile banking apps have increased through the pandemic. Between January and September 2020, monthly active user growth in Indonesia’s leading mobile banking apps went up by 44% compared to the same period a year before, according to Google, Temasek, and Bain & Company’s eConomy report.

Large tech players are also sharpening their fintech offerings in a drive toward higher margins and potentially greater profitability, making them more attractive acquisition or IPO candidates.

Amid talks of a public listing, Traveloka has said it will be dialing up its pay-later offering, which it sees as complementary to its core travel product. Buying a bank is also an option that’s on the table, company president Caesar Indra told Reuters in an interview.

Traveloka is not the only firm toying with the prospect of becoming a bank. After picking up a full digital banking license in Singapore, Sea Group’s Shopee has acquired Indonesia’s PT Bank Kesejahteraan Ekonomi (Bank BKE) with the goal of turning it into a digital bank, while Gojek has increased its stake in Bank Jago, which lets Gojek’s users instantly open a bank account with the lender.

Indonesia’s Financial Services Authority (OJK) is expected to release new digital bank regulations by mid-2021.

In this landscape report, we map out the key players in Indonesia’s fintech space, look at how investments are trending, and provide data on the funding rounds that we’re aware of.

Here’s a look at how funding in the space has been going lately:

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