Market Trends of Indonesia Financial Technology Services Industry
Digital Payments Contribute Significantly to Growth
- The demand for digital payments, combined with the increasing internet penetration and the country's increasing tech-savvy population, is fueling the market’s growth by creating opportunities for financial technology service providers to collaborate with traditional banks to offer online services.
- Indonesia has been registering significant partnerships among fintechs and banks to facilitate the banks' digital service offering with the growth of aggregate value of e-money transactions, creating a growth opportunity for the vendors in the market. For instance, in February 2024, PT Krom Bank Indonesia Tbk (Krom) launched an application using the ecosystem of Kredivo GROUP, a market vendor, for loan products to target the younger generation.
- The market studied has been registering significant startup investments in line with the demand for digital payments in the country and the need for financial technology service providers. Global BFSI companies have been increasingly investing in Indonesia's burgeoning financial services sector. Mitsubishi UJF Financial Group (MUFG) invested in the Jakarta-based fintech unicorn Akulaku with USD 200 million. Such investments are expected to drive the market’s growth during the forecast period.
- The adoption of digital payments in the B2B segments for better transaction management, the availability of mobile point-of-sale systems with a built-in enterprise resource planning (ERP)/accounting system, QRIS, debit, and credit card payment enablement, and financing support for MSMEs are supporting the demand for the country's financial technology service providers.
- The increasing startup investments in financial technology service companies in the country would support the market’s growth by strengthening the supply side of the market. For instance, in October 2023, LUNA, an Indonesia-based fintech and vertical software-as-a-service (SaaS) platform for merchants to improve their digital payment processes, announced the completion of a financing round that will fuel the market’s growth.
Understand The Key Trends Shaping This Market
Download PDF
Java Region to Register Significant Growth
- Indonesia has been witnessing significant growth in Internet penetration, which is anticipated to support the demand for digital transformation in the financial sector and create growth opportunities for financial technology service providers in the country's provinces.
- In February 2024, the Indonesian Internet Service Provider Association (APJII ) reported that the Java province had the highest penetration rate of Internet usage. The association reported that the Java province is the region with the highest penetration rate of Internet usage (83.64%), followed by Sumatera (77.34%), Kalimantan (77.42%), Bali and Nusa Tenggara (71.80%), Sulawesi (68.35%), and Maluku and Papua (69.91%).
- APJII reported that based on the urban or rural classification, the contribution of internet users in urban areas reached 69.5%, with a penetration rate of 82.2%. Indonesia's rural areas also contributed less at 30.5%, with a penetration rate of 74%. The increasing internet penetration in the country's urban areas in the JAVA region is expected to support the growth of the market in the coming years.
- The country's west Java Province has a large population, and the encore, using urbanization and urbanization province, would create a demand for technology in a technology-based region, fueling the demand for financial technology service technology in the market.
- The presence of major cities, such as Jakarta, Surabaya, Bekasi, and others, in the Java region, is expected to fuel the market’s growth. In January 2024, Jakarta-based Komunal, a company in the FinTech sector, successfully raised an additional fund of USD 5.5 million to expand its services for digital deposits across various rural banks nationwide and transform the country's traditional banking model. This shows the growth of financial technology services in the major cities of the country's Java province during the forecast period.
