Introduction

Over the years, fintech has become very much popular in Indonesia which is because of its accessibility and easy usage among the population. It has also called in several foreign investors and fintech companies all around the globe; with many looking to cut out their profits from the Indonesian market. However, doubts might arise; therefore it is essential to know the four reasons why the Indonesian market presents a lucrative opportunity for fintech growth.

According to Statista, the largest market segment for 2022 is digital payments, with a transaction value of 72.91 billion dollars. This shows how active the sector has become over the years when compared to 2015. Hence, this piece helps to clear doubts of investors or fintech companies about the Indonesian market and how it presents a profitable opportunity for the growth of fintech.

 Why The Indonesian Market Presents A Profitable Opportunity For The Growth of Financial Technology

The Indonesian market is one of the markets in Asia to achieve massive growth within a short period. According to International Trade Administration, the country consisting of over 270 million people has the largest economy in the Southeastern part of Asia, with a GDP of 1.1 trillion dollars. This number seems quite promising as there are also analyses and predictions among analysts and economists as to how much the economy will grow in the coming years.

The introduction of fintech in recent years has also helped boost the country’s economy in several ways by aiding one of the major sectors- the MSMEs. However, foreign investors and fintech companies might have certain causes for concern about whether the market is profitable. A few others might want reasons why they should invest. Well, there are four major reasons as to why the market offers a profitable opportunity for the growth of Financial technology. There are:

• The increase in the number of internet and smartphone users.

Just like several other countries in the world, the citizens of Indonesia are becoming more aware of all that the internet has to offer. This has made many people resort to smartphones for easy access. The capital city, Jakarta, is one with the most smartphone users. Far back in 2015, 47 percent of the city’s population owned a smartphone, while presently, over 77 percent own a smartphone. The rural areas are not left out as well. A decent number are starting to get used to smartphones.

This development did not only make the country’s populace more involved in the digital world, but it opened more opportunities for fintech companies. The companies can now easily advertise their brands and broaden their opportunities to expand their financial services. However, to properly serve the Indonesian market, companies must collaborate with the government to figure out how to create a better experience that serves the need of the market.

• COVID-19 pandemic boosts digital transactions in Indonesia

Due to the coronavirus pandemic, many consumers are moving to online transactions to observe the restriction measures put up by the country’s government. This, in turn, increases the transaction volume of fintech companies as people notice how easy and safe financial technology is. With that said, the coronavirus did not only bring awareness to Fintech, it opened the citizens’ eyes to a much easier platform to pay for transactions.

• Opportunities arising from middle-class and MSMEs.

The middle-income class and MSMEs consist of the majority of the Indonesian population, and these groups have a common problem. They are unable to access loans from banks because of the model and structure of their business.

Regardless, the very few banks and financial institutions willing to offer loans still find it very difficult to do so. This is because of the large topography of the country. However, these hindrances can’t stop the fintech companies in the country. All they need to do is create unique technology and business models to disburse funds to the market.

• Indonesia’s Fintech sector is consolidating

When Fintech was introduced newly in the country, no regulations were guiding the companies. The companies were just testing out business models in the market to see which was most acceptable. This continued until the Indonesian Financial Authority put up a few rules to protect the consumers.

However, this isn’t the case now as every fintech company in the country has a code of conduct that they must obey. What’s more, the government is highly involved in checking the license of every player in the country. These all make the fintech industry much safer for consumers and payers alike.

Wrap Up

Want to invest in the emerging fintech sector in Indonesia and wondering if it is a lucrative investment? Well, the fintech sector of the country is promising and provides several profitable opportunities for fintech companies. Hence, there are over four reasons why the Indonesian market presents a profitable opportunity for the progress of financial technology. Go through this piece to get prepared.