Indonesia’s Fintech Sector Grows 6X in Ten Years

According to an article posted in Kompas, AC Ventures (a top Southeast Asian venture capital firm that invests in early-stage startups focused on Indonesia and ASEAN) together with the Boston Consulting Group (a global consulting firm that partners with leaders in business and society to tackle their most important challenges) released a report on the level of development of the financial technology sector (fintech) in Indonesia, which shows that there has been a 6-fold increase in fintech players in Indonesia in the last 10-years.

There were only 51-fintech businesses in 2011, but by 2022 this number had reached 334.

Kompas say that in the report, the initial growth of the fintech sector was driven by the payment segment. However, currently the fintech landscape in Indonesia is increasingly diverse and dynamic, where the lending, payment and wealthtech sectors are promising future industries.

“As our comprehensive analysis shows, the fintech industry in Indonesia is booming, and shows the tremendous growth potential of the country’s digital economy,” said Managing Director and Partner at Boston Consulting Group, Sumit Kumar in Jakarta, Wednesday (29/3 /2023).

In addition, new segments in the fintech sector, such as software as a service (SaaS) and insurtech are increasingly emerging, showing that fintech in Indonesia is getting more mature and moving towards more sophisticated products and services.

The report also explains that fintech offerings are experiencing a spike in customer engagement in Indonesia. The payments segment that has more than 60-million active users in 2020 is expected to have a compound annual growth rate (CAGR) of 26-percent until 2025.

In the lending space, there are more than 30-million active peer-to-peer borrower accounts in 2021. Meanwhile, the wealthtech segment has more than 9-million retail investors in 2022. SaaS platform adoption is also increasing with 6-million MSMEs currently using it, which represents a 26-fold expansion over the previous three years say Kompas.

According to Sumit Kumar, the rapidly growing fintech market can be seen from the presence of new players emerging, along with the development of more established players. Equity in this market is determined based on the level of operator or vertical maturity. “This is an exciting time for customer-led innovation, collaboration between fintech players and traditional financial institutions, regulatory bodies, and regulatory vision. We hope our insights will equip industry players with a deeper understanding of the fintech ecosystem, placing them in a stronger position to seize new opportunities and gain competitive advantage” he said.

On that occasion, AC Ventures Founder and Managing Partner Adrian Li said that AC Ventures is one of the most active investors in the Indonesian fintech industry. According to him, the exponential increase in the number of fintech players, increasing customer engagement, and increased equity funding are all indications of the sector’s huge potential.

“Our investment strategy aligns with the most impactful and innovative companies in this space. This fintech report is one form of our commitment at AC Ventures to continue to support and invest in the fast-growing local fintech sector to support the realization of an inclusive financial ecosystem in Indonesia.” said Adrian Li.

Source: Kompas

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