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1 Investing In Financial Technology In Indonesia In 2022
1.1 The Landscape of Fintech In Indonesia
1.2 Challenges Of Fintech In Indonesia
1.3 Crypto And Its Regulatory Policy In Indonesia
2 Conclusion

Fintech has taken the lead in closing the financial gap in Indonesia. This is because of its massive adoption by the population due to the coronavirus pandemic in 2020. Because of the many benefits the sector provides, many investors have looked into investing in fintech in Indonesia in 2022 and beyond to profit from the market. However, there are a few challenges in the industry.

According to the Boston consult group, the pandemic shut down several storefronts globally, moving over five trillion dollars worth of sales online. Indonesia, being one of the countries that adopted Fintech, has improved transactions leading to more investments. Below is writing that talks about the investment of Fintech in Indonesia.

Investing In Financial Technology In Indonesia In 2022

The coronavirus pandemic is one of the many pandemics that affect the market’s structure internationally. Hence, one of the many countries to suffer the effects of the COVID-19 is Indonesia. Due to its widespread, the pandemic made it hard for MSMEs to transact and go about their normal functions, thereby leading people to investing in fintech in Indonesia in 2022 and beyond.

Being the perfect alternative for the pandemic, people noticed that Fintech provided a safer, cheaper, and readily accessible platform for consumers and MSMEs, which ensured a permanent adoption by the citizens of the country. There is also a prediction by economists that banking as a service will continue to be the easiest platform for non-financial institutions to release embedded finance products that are innovative.

Not just Indonesia, but several developing countries like Brazil, India, and Mexico are starting to adopt Fintech. This has caused a significant increase in electronic wallets, online bank services, and several other financial services and products. The unbanked population of the countries is also something investors look out for. A country with a high unbanked population provides the perfect opportunities for Fintech companies to generate profits.

The Landscape of Fintech In Indonesia

One of the major conditions in Indonesia that boosts Fintech growth is its high mobile phone penetration. With the population of the country owning more smartphones than traditional bank accounts, many people easily go for Fintech platforms to perform their transactions.

However, the problem is that the internet coverage doesn’t stretch to every rural area in the country, making the adoption slow. Furthermore, it is easier to pay for transactions outside the country and within. One does not have to go through the hassle of waiting for long periods or forfeiting their daily activity. A platform most people use for convenience in the country is GoPay.

Considering the landscape of Fintech in Indonesia, the various sectors that makes up the landscape can be categorized in terms of percentage. With that said;

  • P2P lending – 43%.
  • Payment – 26%.
  • Market provisioning – 8%.
  • Wealth Management – 6%.
  • Enabler – 6%.
  • Others – 6%.
  • Insuretech – 3%.
  • Equity Crowdfunding – 2%.

This means that the landscape of Fintech in Indonesia comprises mostly P2P lending companies and least Equity Crowdfunding platforms.

Challenges Of Fintech In Indonesia

The major challenge that Financial Technology faces in Indonesia is the series of unstable regulations. The regulation was enacted by the Financial Services Authority of Indonesia to eliminate the many illegal Fintech companies in the market. But regardless of the regulations, many illegal companies still operate, causing several problems in the market. However, OJK is taking stricter measures by enacting laws better than the former ones. For instance, a starting firm must pay between 174,000 USD to a million dollars to get licensed and registered in the country.

The unavailability of SMEs and customer data is another challenge Fintech companies face. The data is important for the companies to analyze the borrower’s loan and see if the person is eligible or not. However, most times, Small and Medium Enterprises (SMEs) do not provide any financial statements to obtain a loan.

 Crypto And Its Regulatory Policy In Indonesia

There are up to 229 cryptocurrencies in Indonesia, and this variety has gotten many transactions. According to Triple-A, Indonesia ranks seventh with a user base of 272 million people. With higher mobile penetration to come, there is bound to be an increase in the user base. However, it is crucial to note that the National Ulem Council looks at crypto as Haram. Therefore, it might not be accepted on several religious grounds.

With authorities of the country acknowledging the perks of crypto, they set up regulations to checkmate the activities in the country. As of now, they are testing policies to regulate and protect traders in the crypto market.

Conclusion

Investing in Fintech in Indonesia in 2022 and beyond is one of the best steps an investor can take in 2022. The market promises high returns due to the high unbanked population in the country. What’s more, one can invest in several sectors in the Fintech landscape. To know about the investment of Fintech in Indonesia, go through this piece.