One of the most developed online businesses in Indonesian society is e-commerce or online stores. This business makes it easy for all people to market their products. Even so, e-commerce is not the only vertical startup that is developing in the country. Apart from them, technology players were also surprised by the emergence of a new industry called FinTech (financial technology).
Definition and types of Indonesian FinTech startups
The term Fintech, or Financial Technology, was originally used to describe new technologies that can help improve and automate financial services. Especially those related to the backend system of existing financial institutions.
Today, the term has expanded to include more consumer-related sectors, such as:
- Innovation and automation for financial services,
- Improved literacy,
- Financial assistance and education,
- Money management,
- Borrow and borrow,
- Retail Banking,
- Money transfers and payments,
- Use of virtual currency (cryptocurrency).
Currently, there are even FinTech companies in specialized fields, such as educational fintech and agricultural fintech.
Millions of people without a bank account
In 2016, global audit firm KPMG reported that only 27% of people in Southeast Asia had a bank account. This means, there are around 438 million people who do not have a bank account in this region. Indonesians alone can make up 40% of the total population in Southeast Asia, making it known as an untapped market for fintech. As of July 2018, 50% of Indonesians still do not have a bank account. Many Indonesians currently still receive salaries and make payments in cash.
Focus on payments and loans
The combination of increasing digitalization and financial awareness shows that fintech startups in Indonesia have very different challenges from other developing countries in the West and East Asia, which use credit cards more. Of the 167 fintech startups in Indonesia, 38% of them are in the payments sector and 31% in the loan sector. This shows the main needs of the Indonesian people, the majority of whom do not have bank accounts.