Indonesia's fintech attracts substantial funding including from Malaysia

JAKARTA, Nov 11 (Bernama): As Indonesia fintech grows rapidly in line with innovation and technology, the ecosystem enjoys a big chunk of foreign capital investment, including from Malaysia, amid the Covid-19 pandemic.

"We predicted that the same funding trend will continue next year,” Indonesian Fintech Association (AFTECH) deputy secretary-general Dickie Widjaja told Bernama, adding that fintech has been resilient.

He said 30 fintech companies had received a total of US$648 million in capital in the first half of this year and almost half of the companies were raising funds prior to the pandemic.

Based on AFTECH 2019-2020 annual member survey, about 55 per cent of fintech investment came from Indonesia followed by Singapore (18 per cent), China (eight per cent) and Japan (seven per cent) while Malaysia contributed two per cent to Indonesia’s fintech investment.

The industry continues to grow along with the increasing adoption of information technology with a transaction value of 19.2 trillion rupiah or RM5.63 billion throughout 2021.

The number of digital wallet or e-money users reached over 500 million, which is almost double the total population.

Dickie said the number of fintech startup companies registered as AFTECH members jumped from 24 to 275 at the end of 2019 and reached 335 by the end of the fourth quarter of 2021.

"The increasing number of registered and licensed fintech operators, the variety of financial service solutions offered and adoption in the market shows it,” he said.

He said the fintech industry continued to grow and develop thanks to the country’s large mobile market and active internet users.

The solutions available in the market also varied from initially only digital payments and fintech lending to now including aggregators, credit scoring, financial planners, equity crowdfunding and project financing.

According to a report, top fintechs disrupting financial services in Indonesia are online brokerage Ajaib, payment solution Cashlez, e-money wallet GoPay, financial solution Koinworks and Payfazz.

On fintech and regulation, Dickie said both are increasingly going hand in hand with technological developments because regulators needed to see how the innovation is shaping up the financial sector.

He said most of the time, the government has provided support and space for companies to innovate, such as giving a regulatory sandbox framework.

Therefore, he said companies must meet this with innovations that continue to prioritise good governance, risk management and consumer protection.

"We hope the community can use fintech services with a positive spirit and good faith,” he said.

He said AFTECH regularly engages with the government to complement the authority’s ability to issue policies and regulations that support innovation and breakthroughs driven by fintech companies.

This form of support, including various perspectives on the potential and challenges that would be discussed at the Indonesia Fintech Summit (IFS) 2021, Dickie said.

The two-day summit, starting today in Bali, is also the culmination and closing event of National Fintech Month.

"Key figures in government, fintech companies and the banking industry in the region will attend IFS. We also invite the public to take part virtually through the www.fintechsummit.co.id platform,” he added.

The summit is part of the Road to G20 Indonesia 2022 and to welcome the country’s G20 Presidency. - Bernama