Fintech Report 2020

Maintaining Growth during Pandemic

© Dec 2020

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 Contents

Contents 1
Forewords 2
Fintech Overview 6
Business Models 7
Technology in Fintech 9
Fintech Ecosystem in Indonesia 11
Business Growth 12
Fintech Funding 18
Opportunity 20
Regulatory Perspective 23
Summary 24
Business Perspective of Fintech 25
Challenges on Pandemic 27
Strategy & Innovation on Pandemic 32
Future Projection 36
Consumer Perspective of Fintech 38
Demography 39
Consumer Behavior on Pandemic 42
Challenges 60
Expectation 60
Future Intention 61
Strategic Collaboration 64
Bibliography 70

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Forewords
Fintech Report is DSResearch’s annual report to provide updates on the financial
technology industry in Indonesia.

In this report, we focus on:

1. The fintech industry dynamics and its ecosystem overview in 2020.
2. Industry perspectives towards fintech growth, trends, and regulations in 2020
3. Public acceptance of fintech products
4. Prospective strategy of fintech in upcoming years

Pandemic has changed the course of our lives this year. However, fintech product’s
adoption has never been so enormous. The digital solution has helped society to
continue doing financial transactions while minimizing the risk. It also helps those
in need of financing, investing, and remittance solutions.

Fintech Report 2020 is based on a nationwide survey encompassing responses

from 1434 people. Questions sought to yield perspectives of usage and attitude in
public acceptance towards fintech products and also exploring the emergence of
growth and trends in the financial industry.

It sheds light on the impact which fintech ecosystem will have on all the stakehold-
ers, the challenges and concerns that all sectors will face, and the emergence of
new businesses and monetization models in this space.

This report is created by DSResearch and Bank CIMB Niaga, also supported by
Ayoconnect and Investree, to gain more insights on fintech’s overview in 2020.

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CIMB Niaga was established as Bank Niaga in 1955. CIMB Group holds around
92.5% of the stakes in CIMB Niaga (including PT Commerce Kapital 1.02%). The
Bank offers a comprehensive suite of both conventional and Islamic banking prod-
ucts and services, through an expanding delivery channel network of 446 network
channels all over Indonesia as at 30 September 2020, including 385 branches,
34 Digital Lounges and 27 mobile branches. CIMB Niaga has 13,042 employees
(consolidated) as at 30 September 2020.

CIMB Group is Malaysia’s second largest financial services provider and one of
ASEAN’s leading universal banking groups. It offers consumer banking, investment
banking, Islamic banking, asset management and insurance products and services.
Headquartered in Kuala Lumpur, the Group is now present in all ASEAN nations
(Malaysia, Indonesia, Thailand, Singapore, Cambodia, Brunei, Vietnam, Myanmar,
Laos and Philippines). Beyond ASEAN, the Group has market presence in China,
Hong Kong, India, Sri Lanka, the US, UK and Korea. CIMB Group is listed on the
Malaysian stock exchange via CIMB Group Holdings Berhad. As at 30 September
2020, the Group had a market capitalization of $7.4 billion.

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Ayoconnect is Indonesia’s first open bill network offering over 3,000 bill
products from 25 categories. The network links Bill Providers such as Utilities,
Telcos, Aggregators or Publishers with Consumer Facing Platforms and Financial
Institutions. Prominent bill categories include phone credits, electricity payments
and game vouchers. The company recently entered into recurring property and
tuition payments.

Ayoconnect enables channel partners to offer and monetize bill payments to

their customers. Bill providers on the other hand use the network to collect
recurring consumer payments faster and cheaper. Ayoconnect operates, main-
tains and extends the network and provides relevant backend infrastructure
technology for companies.

Ayoconnect has processed more than 51 million successful transactions to date

across all 34 Indonesian provinces.

For more information, please visit https://ayoconnect.id

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Investree is a B2B financial technology lending company in Indonesia with a
mission to use data and technology to make financing more accessible and
affordable to SMEs while also connect them with lenders who want to support
them and gain an attractive return. Through collaborations with strategic partners
in the digital and financial ecosystem as well as the creation of innovative financ-
ing products, Investree commits to continuously provide various digital solutions
for SMEs. Investree is based in Indonesia but has grown its regional footprint in
Thailand and soon to be in the Philippines.

We are the only fintech lending company that has obtained Business License for
Information Technology-Based Lending and Borrowing Services from the Finan-
cial Services Authority in Indonesia (OJK) for two types of businesses, namely
conventional and sharia. Closing the 3rd quarter of 2020, Investree recorded a
total loan facility of Rp7 trillion and loan value disbursed of Rp5 trillion with an
average yield of 16.9% p.a. and TKB90 of 99%. Investree was also named “Best
Fintech of the Year” by The Asset Magazine and “Best P2P Lending Platform for
SMEs” by The Asian Banker.

For more information, please visit http://www.investree.id/

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01. Fintech
Overview

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Fintech
Overview
Financial technology (fintech) is one of the drivers of the digital economy in Indonesia. According
to the e-Conomy SEA 20201 report, Indonesia managed to record $44 billion in Gross Merchandise
Value (GMV) contributed by the e-commerce, on-demand, online travel, and fintech sectors. Accord-
ing to analysts, the Covid-19 pandemic has accelerated fintech growth in the region. The sub-sec-
tors that experienced growth included investment (116%), remittance (43%), insurance (30%), dig-
ital payments (3%), and lending (<1%).

This achievement is inseparable from internet penetration in Indonesia. According to APJII’s latest
data from a survey conducted until Q2 20202, the number of internet users has reached 196.7 mil-
lion, or the equivalent of 73.7 percent of the total population in Indonesia. The increase is around
8.9% from 2019. Java Island is still the largest contributor to internet users in Indonesia with 55.7%.

Business Model
The huge market share has implications for variants of business models. In the last decade, financial ser-
vices have begun to be democratized with technology. Based on the existing regulatory structure at the
Bank Indonesia, Financial Services Authority, and Commodity Futures Trading Supervisory Agency; the
fintech business model can be mapped into seven main categories.

Figure 01. Mapping of Regulated Fintech Business Models in Indonesia/DSResearch

Bank Indonesia Otoritas Jasa Keuangan

P2P Lending
Payment System
Equity Crowdfunding
Remittance Fintech Indonesia
Inovasi Keuangan Digital
E-money (Digital wallet)
Aggregator
Blockchain-Based
Claim Service Handling
Credit Scoring
e-KYC
Financial Agent
Funding Agent
Insurance Broker Marketplace
Insurtech
Online Distress Solution
Project Financing
Property Investment Management
RegTech - PEP
Tax & Accounting
Verification Technology

BAPPEBTI
Investment

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 The P2P Lending is regulated by POJK No.77 POJK.01/2016. The equity crowdfunding service is reg-
ulated by POJK No.37/POJK.04/2018. The IKD players are regulated by POJK No.13/POJK.02/2018.
Meanwhile, the investment platforms (mutual funds and stocks) also have several accompanying
regulations, such as POJK No.31/POJK.04/2018, POJK No.30/POJK.04/2017, and others. E-money
or digital wallet services are regulated in PBI No.20/6/PBI/2018. Then the payment system rules are
described in PBI No.19/12/PBI/2017. Meanwhile, remittances are regulated through PBI No.14/23/
PBI/2012.

“
“Fintech innovation can be a complement to serving the public in using financial service products.
Thoughts of developing on their own and fear of losing the competition must be far left behind. In
fact, cooperation in the ecosystem will make the industry grow together. We hope that all stake-
holders have the same thoughts and take an active role following their fields in improving the fintech
ecosystem. OJK continues to encourage innovation and cooperation in the ecosystem to continue to
exist. Fintech and existing financial service industries, such as banking, financing, and capital mar-
kets can also collaborate.”

OJK Fintech Supervision and Licensing Director, Tris Yulianta

The following is an explanation for each category:

P2P (Peer-to-Peer) Lending Digital Financial Innovation (Inovasi Keuangan

Financial service providers in charge of bringing
together lenders and borrowers, both from indi-
viduals and institutions. The loan is provided for
consumptive or productive needs. Some plat-
forms are standalone, while others are integrated
with the third party of digital services ex. e-com-
merce, OTA, until edtech.
Digital; IKD)
Fintech platform testing mechanisms related to
business processes, business models, and fi-
nancial instruments. The purpose is to provide
new added value to the financial services sec-
tor by involving the digital ecosystem. In this
phase, each business model does not yet have
specific regulations.

Equity Crowdfunding E-money

Intermediary digital platforms for business own-
ers to get capital from the community. The pay-
off is in the form of shares, with profits based on
business growth; so there is a risk factor in it. The
criteria for the platform, investors, and the num-
ber of funds collected are specified in the OJK
regulations (POJK).
Investment
A digital application that helps people to invest. It
includes information services, buying, and selling
of information assets. The most popular instru-
ments today are gold, mutual funds, and stocks.
Server-based digital wallet service to accommo-
date a certain amount of non-cash money from
users. Allows users to save, send, and pay directly
through the application.
Remittance
Digital service for sending and receiving money
from other countries. Convert currencies accord-
ing to the origin or destination of delivery.
Payment System
Digital financial services to help other platforms
manage transactions. One of the most popular
models is a payment gateway.

Indonesian authorities also have a Regulatory Sandbox for the fintech business. It is a feasibility test-
ing tool for a new business model. It can accommodate product innovations that flow rapidly. The
mechanism is carried out by the Financial Services Authority and Bank Indonesia according to their
business domain.

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Technology in Fintech
Observed from the types of fintech services that exist today, several fundamental technologies are used
to support business processes. Based on the Fintech Infrastructure Market Map released by CBInsight3,
15 technology infrastructures are widely used by players in the world. The following is an explanation
for each technology:

Data Aggregation is a platform that provides Recurring Payment is a technological

data collection capabilities from multiple mechanism that allows service providers to
sources for analysis and reporting needs. charge recurring or subscription payments.

Payments Platform is a payment service Chargeback is a technological mechanism

provider supervised by local authorities. In that allows service providers to make
Indonesia, the player must hold a license from automatic refunds for certain issues.
Bank Indonesia.

Push-to-Card is a payment service provider

that operates via existing card networks such
as VisaNet.

Figure 02. Fintech Infrastructure Market Map/CBinsights

Data Aggregation Banking-as-a-Service Middleware

Payment Platforms
AML/Fraud Prevention

Push-to-Card

KYC
Cross-Border-Payments
Recurring Payments

Custody/Clearing
Switching/Managing Wallet
Chargeback

Receipt/Management
API Search ATM/Checks

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 API Search platform allows developers to find financial service APIs to integrate into
their systems.

Banking-as-a-Service is enabling fintech players to develop services on top of

existing bank infrastructure.

Cross-border payments facilitate transfers of money between countries. Some call it

a remittance service.

Custody/clearing is a platform that facilitates the exchange of electronic financial

documents/data between banks or financial institutions.

Receipt Management is a platform to make it easier for businesses to organize,

archive, and view profits by tracking complete and accurate receipts.

Middleware is an intermediary service provider between platforms, whether fintech with

fintech or fintech with non-fintech. Generally using an API connection

AML/Fraud Prevention helps financial businesses prevent fraud that results in losses,
undermines credibility, and undermines business innovation.

KYC (Know Your Customer) helps businesses to verify identity, conformity, and quantify user
risk. Used to determine creditworthiness or other considerations in financial services.

Switching/Managing Wallet helps fintech players to provide account transfer

services from one institution/wallet manager to another.

ATM/Check is a service that provides an interbank network to facilitate user transactions.

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 Fintech
02. Ecosystem

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 Fintech
Ecosystem
Covid-19 doesn’t hinder fintech innovation and growth in Indonesia. Based on data released by
the Financial Services Authority4, the accumulated loan from P2P lending as of September 2020
reached Rp128.7 trillion. There was a significant increase of 113.05% year-on-year. Not only fintech
lending, but another financial business is also experiencing growth along with physical restrictions.
For example, in the digital wallet; LinkAja succeeded in increasing user growth by 23%. In Novem-
ber 2020, they’re having more than 58 million registered users.

These statistics are an interesting starting point for further exploring the development of fintech in
Indonesia during the pandemic.

Business Growth
Fintech Lending
Fintech lending is still on a fast growth path from year to year. As of September 2020, there were
Rp128.7 trillion in loan distribution, involving 29.2 million borrower accounts and 681 thousand
investor accounts. Users from Java still dominate the majority of transactions. The rate of growth
outside Java is much smaller, indicating inequality in the distribution of services. Several factors
contributed to this, including the need for business owners to have representatives or partners in
their operational areas; also related to digital and financial literacy in Indonesia.

According to data quoted by President Joko Widodo5, financial literacy in Indonesia still reaches
35.5%. Meanwhile, digital literacy is only 31.26%. This percentage makes the financial inclusion in-
dex in Indonesia only reached 76%, lower than Singapore 86%, Malaysia 85%, and Thailand 82%.
Non-bank financial institutions are expected to encourage an increase in these aspects.

Figure 03. Fintech Lending Statistic/OJK

Accumulation of Loan Distribution* Accumulation of Borrower Accounts* Accumulation of Lender Accounts*
Rp110.30 T 559,045
24,017,322 500,030 20.78% yoy
112.79% yoy 222.12% yoy
101.13% yoy

15,397,251
Rp69.82T 320.16% yoy 155,230
255.93% yoy 104.87% yoy
50,281
109.26% yoy
Rp19.62 T 102,149 118,696
Rp18.40 T 3,664,645 5,199,607 1,996
767.56% yoy Rp11.67T 114.61% yoy 1,444.19% yoy 3,171,872 114.98% yoy 74.63% yoy
103.16% yoy 28.47% yoy
282.93% yoy 356.51% yoy
Rp3.05 T 694,803 3,756 3,901
705.82% yoy 3,013.47% yoy 88.18% yoy 10.64% yoy

Dec 2018 Dec 2019 Sep 2020 Dec 2018 Dec 2019 Sep 2020 Dec 2018 Dec 2019 Sep 2020

Java Outside Java Aboard Registered/Licensed Company

Registered Licensed Conventional Sharia Total

116 36 142 11 152

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Until now, fintech lending is still accommodated by POJK No.77/POJK.01/2016. As of December 2020,
there are 152 fintech lenders registered in OJK, while 36 players have obtained licensed status. The fol-
lowing is a list of P2P lending companies that have obtained registered and licensed status:

KTA KILAT

According to the latest study by DSResearch and AFPI6, for now, the majority of fintech lending business
is targeting the productive segment. Commonly, they provide capital loans to help MSMEs. There are also
many players who are targeting two segments at once, both productive and consumptive.

Figure 04. Type of Fintech Lending Companies/DSResearch

Productive

57

Productive 57
Consumptive 30
Consumptive Sharia 6
48 4 Productive & Consumptive 48
Productive & Sharia 4

6
30

Sharia

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 Digital Wallet
Digital wallets or e-wallets are an essential component in the growth of digital business in In-
donesia. Almost all transactional platforms today integrate their services into digital wallets. The
purpose is to provide a seamless user experience on payment. App Annie and iPrice’s research (per
Q2 20207) shows statistics on the use of digital wallet apps in Indonesia. The ranking is not much
changed from the results of the Fintech Report 2019 survey. GoPay, which supports the Gojek
ecosystem, still tops the standings, followed by Ovo, which is integrated with its competitor, Grab.

Figure 05. E-money Platform Growth per Q2 2020/iPrice

Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

Integration is one of the main strategies applied by each player. When the platform is integrat-
ed into an application that has a huge user base, it will significantly impact the value of transac-
tions. The Markplus8 and Ipsos surveys even put ShopeePay in the top position of digital wallet
popularity this year. The service is owned by Shopee, the e-commerce giant from Sea Group,
and is the most widely used in Indonesia9.

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 QRIS (Quick Response Code Indonesian Standard) has also started operating, it is supposed to
be a catalyst for the growth of digital wallets. The QRIS mechanism allows various registered
digital wallet apps to be used to pay merchants via a single QR code. As is well known, digital
payments are an option that many offline businesses are offering to their customers.

Figure 06. An Overview of the QRIS Mechanism in Payment/Bank Indonesia

In 2020, Bank Indonesia10 issued digital wallet licenses to six companies. Most of the companies
that focus on working on this platform are banking and technology companies.

Company License Date Platform

PT Paprika Multi Media No. 22/7/DKSP/Srt/B tanggal 8 6 Februari 2020 Paprika

Januari 2020

PT Astra Digital Arta No. 22/59/DKSP/Srt/B tanggal 28 18 Februari 2020 AstraPay

Januari 2020

PT Bank OCBC NISP No. 21/582/DKSP/Srt/B tanggal 2 Maret 2020 One Wallet
19 Desember 2019

PT Rpay Finansial Digi- No. 21/586/DKSP/Srt/B tanggal 18 Maret 2020 Yourpay

tal Indonesia 19 Desember 2019

PT Visi Jaya Indonesia No. 22/174/DKSP/Srt/B tanggal 9 6 April 2020 Eidupay

Maret 2020

PT Bank Jabar dan No. 22/156/DKSP/Srt/B tanggal 5 Maret 2020 DigiCash

Banten 16 Maret 2020

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 Investment
Digital applications for investment have appeared since the beginning of the decade in Indonesia.
Stockbit became one of the pioneers, launched in 2013. Low financial literacy and less popular
stock instruments at that time made the platform only able to target specific user segments. In
2017, some applications presented investment apps with gold instruments such as e-mas, Indog-
old, Tamasia, etc. They see the habits of people in Indonesia to buy and sell gold. Digital platforms
are trying to democratize the old way of investing in gold.

The traction obtained by the digital gold platform is quite good because it can accommodate a wid-
er segment of users. Some companies integrate their investment services with popular sites such
as online marketplaces or ride-hailing. Currently, several applications process gold transactions
digitally, as follows:

The rise in the gold investment platform has led the Jakarta Futures Exchange to inaugurate a
special committee to handle digital gold players through a decree SK/193/DIR/BBJ/VI/20 con-
cerning the formation of a digital gold physical market committee. The formation of this com-
mittee is mandatory as stated by the legislation of the Commodity Futures Trading Supervisory
Agency, as well as to oversee digital gold players.

Mutual funds11 are also a popular choice these days because the risk tends to be lower than
stocks. Several startups launched special services to accommodate the instrument. Some play-
ers integrate their services into popular online marketplaces. Seeing market conditions in Indo-
nesia, they also provide educational services to help users identify their respective investment
profiles. This includes using artificial intelligence to release Robo Advisors that are integrated
into the investment platform.

Here are some popular mutual fund investment applications in Indonesia:

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 Insurtech
The report entitled Insurtech Strategic Innovation12 launched by DSResearch and Mandiri Capital
Indonesia outlines insurance technology (insurtech) based on the scope of its platform. There are
five sections, namely insurtech services, insurance company applications, bancassurance, aggre-
gator sites, and technology enablers to help conventional insurance go digital.
Figure 07. Insurtech ecosystem in Indonesia/DSResearch
Corporate with Insurance as A
Tech Adoption Bank Subsidiary

Insurtech Platform

Insurance
Player
in Indonesia

Aggregator Technology
Enablement

According to the OJK13, as of July 2020, the penetration rate of life insurance is still at 1.1%. There
was a decrease in the level of penetration in line with economic pressure due to the pandemic.
Insurance penetration is the ratio level of the number of funds in the insurance industry to gross
domestic product.

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Fintech Funding
This year (until the report was published), we recorded 16 funding transactions for fintech startups in
Indonesia. From 10 funding with an announced amount, it raised $360 million. For the transaction, this
year decreased compared to the previous year, but the value was larger. In 2019, there were 23 fintech
funding transactions. Of the 12 declared amounts, $217 million was raised.

There were no fintech funding publications throughout the first quarter of this year, all new funding was
announced starting April 2020. Here’s the full list:

Date Company Stage Disclosed Amount Disclosed Investors

March Digiasia Bios Series B - Mastercard

April Investree Series C $23.500.000,00 MUFG Innovation Partners (MUIP), BRI

Ventures, SBI Holdings, 9F Fintech
Holdings Group
April KoinWorks Debt Funding $20.000.000,00 Quona Capital, EV Growth, Saison
Capital

April Qoala Series A $13.500.000,00 Centauri Fund, Sequoia India, Flourish

Ventures, Kookmin Bank Investments,
Mirae Asset Venture Investment, Mirae
Asset Sekuritas. Investor terdahulu
antara lain Central Capital Ventura dari
Bank Central Asia, MDI Ventures, Surge,
MassMutual Ventures Southeast Asia,
SeedPlus.
April Modalku Series C - BRI Ventures

May KoinWorks Debt Funding $10.000.000,00 Lendable

May Pintek Pre-Series A - Accion Venture Lab, Global Founders

Capital

June Wallex Technologies Series A - BAce Capital, SMDV, Skystar Capital

July Payfazz Series B $53.000.000,00 B Capital Group, Insignia Ventures,

Tiger Global Management, Y Combina-
tor, ACE & Company, Quiet Capita, BRI
Ventures
July AwanTunai Debt Funding $20.000.000,00 Accial Capital

August Ayoconnect Pre-Series B $5.000.000,00 BRI Ventures, Kakaku.com, Brama One

Ventures, Finch Capital, Amand Ven-
tures, Strive, AC Ventures
November Kredivo Debt Funding $100.000.000,00 Victory Park Capital Advisors

November LinkAja Corporate $100.000.000,00 Grab, Telkomsel, BRI Ventures, Mandiri

Round Capital Indonesia

November Investree Debt Funding $10.000.000,00 Accial Capital

November Finantier Seed Funding - East Ventures, AC Ventures, Genesia

Ventures

December Pintek Series A - Finch Capital, Accion Venture Lab

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 If last year most of the funding was in the early stages, this year more funding was disbursed for late
stages funding. Some analysts14 have predicted that the crisis caused by this pandemic will make
investors more selective in disbursing their funds. Most chose to increase the spin in established busi-
nesses and get good traction, also in this Covid-19 period.

Besides, earlier this year Cashlez successfully conducted an IPO on the Indonesia Stock Exchange.
The company released 250 million new shares for Rp350 per share. This total capital comprises
approximately 17.5 percent of the paid-up and issued capital. Managed to book Rp87.5 billion from
the celebration.

This year’s funding gains have maintained a record over the past four years. Fintech startups continue
to dominate the amount of funding in Indonesia’s digital landscape.

Figure 08. Fintech has Dominated Indonesian Startup Funding in Recent Years/DSResearch

Business vertical Funding by 2020

15

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Opportunity
Remittance
This service allows for foreign exchange financial transactions; some call it a cross-border money
transfer. Usually used by users to receive or send money to users abroad. The platforms are under
Bank Indonesia regulation No.21/8/PBI/2019 concerning the Implementation of Fund Transfers and
Scheduled Clearing. Currently, several registered players run their business digitally.
Figure 09. Remittance Process and Ecosystem/Alie Group15

Sending Country Receiving Country

Bank
Account Rp Mobile Money
Debit/
MNO
Credit
Card Digital Digital Bank
Bank Account
Mobile E-wallet Debit/
Online Account Credit
Reveiver Card
Sender
Money MTO Bank
Bank Transfer Bank
Bank Payment
Bank Platform
Network
Account Agent Agent
Debit/ Cash/
Bank Bank Pickup
Credit
Card Cash Delivery

One of the market segments of remittance services is migrant workers. According to data from Bank
Indonesia and BNP2TKI16, as of 2018, there are 3.6 million Indonesian workers who work abroad.
They’re spread across various continents, from Asia, Australia, America, Africa, and Europe. Remit-
tance services help them to send money to families in Indonesia.

Legacy players in this segment include banking, post offices, and money transfer companies such as
Western Union. One of the pain points of existing services is high administrative costs. Some digital
remittance startups offer reduced transfer fees. It possibly due to the optimization of the use of tech-
nology and internet infrastructure, thereby simplifying business processes.

Digital remittance players in Indonesia:

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 According to data compiled by Statista in the “Personal Finance Report 2020”, the value of digital
remittance transactions in Indonesia is projected to reach $573 million in 2020. And will continue to
increase until 2024 to reach $1.1 billion.

Figure 10. Remittance Service Growth Trend in Indonesia/Statista

1,178
1,052
1000
902

750 739
In million US $

573
500 474
357
270
250

2017 2018 2019 2020 2021 2022 2023 2024

Bank Transfer App

Domestic transfer services also have the opportunity to be worked on by fintech players. Again, the
issue was raised to minimize transaction costs. Especially for bank transfers, users are charged a fee
for each transaction. Meanwhile, for SMEs, the amount of these costs is quite calculated, especially
when the intensity of sending funds is high.

According to Bank Indonesia data, in 2019 the volume of domestic transactions recorded at more than
218.89 million with a nominal value of Rp84.47 trillion. The remittance business itself recorded 37.7
million transactions with a value of Rp90.67 trillion. This nearly balanced figure is surprising consider-
ing that in 2018 the remittance business dominated with a nominal value of Rp177.1 trillion compared
to domestic Rp32.71 trillion.

Flip and OY! Indonesia is the two biggest players playing in this segment. They accommodate
bank transfer services for a low fee. Apart from consumers (B2C), they also provide services for
businesses (B2B).
Figure 11. Bank Transfer App Mechanism/Flip

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 Fintech API-Based Services

API-based business models are also being implemented by fintech. They exist as “fintech enablers”,
enabling financial or non-financial companies to provide various services, for example payments,
loans, investment, etc. In Indonesia, currently, there are several startups in this segment. Here’s a list
of these startups, each with a different specialty:

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 Regulatory Perspective
OJK is one of the regulators with an essential role in the fintech industry. In this report, DSResearch
interviewed the OJK Fintech Supervision and Licensing Director, Tris Yulianta. According to him, the
fintech ecosystem has begun to grow well, as evidenced by the synergy between fintech lending, pay-
ment, e-commerce, digital signature, e-KYC, insurtech, digital banking, and/or other digital financial
innovators; as well as the conventional financial services industry has been done a lot.

“
“We hope that this ecosystem can be utilized properly by all people in Indonesia, especially for un-
banked and underserved business actors. In the future, we also want various types of collaboration
in the fintech ecosystem to continue to increase and bring more useful innovations while remaining
in the correct regulatory corridors.”

The fintech sector was also considered relatively stable during the pandemic. Based on data on loan
disbursement, its performance declined in April 2020 when social and physical restrictions began.
However, since August 2020, recovery has been seen with a fairly exponential increase. OJK predicts
that the growth of fintech lending will continue to increase in line with the interest in digital transac-
tions by the public during the pandemic.

Figure 12. Fintech loan distribution statistics in the pandemic period / OJK

Rp10,000 Rp8,958

Rp7,593 Rp6,953 Rp7,140

Rp6,827
Billion

Rp4,285 Rp4,900
Rp5,000

Rp0

Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20

Financial Inclusion
Further improvements that need to be prepared are regarding community literacy and inclusion. In
2019, the literacy index was 38.03% and the inclusion index was 76.19%. This indicates that there
are still many people who have accessed financial services but do not yet have a good understanding.
This indicates that there is still a gap of 38% for those who use financial service products, but they do
not fully understand financial products or services including the risks and benefits.

Besides, according to data from the 2019 National Financial Literacy Survey, only about 31.26% of
people have accessed digital-based financial services. The number still needs to be increased with
massive and on target educational activities.

“
“For fintech lending, we have a policy that has been implemented so that all players can carry out at
least 12 socialization/educational activities, most of which must be held outside Java. We know that
people outside Java are relatively left behind in terms of access to financial services.”

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 Business
03. Perspectives of
Fintech

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Business Perspective of
Fintech
The rise of a pandemic unexpectedly affects almost every aspect of the business. This condition
causes firms on the verge of bankruptcy, layoffs, and cuts in wages in several companies.

The fintech report this year sets aside a scope to specifically present the dynamics faced by fintech
and ecosystems during the pandemic. This section is divided into three sub-chapters: challenges,
strategies, and plans after the pandemic hits.

Challenges on Pandemic
Cessation of physical activity puts many businesses closed. The PSBB has led to a significant drop in
revenue for small, large companies and retail customers. When consumption and purchasing power
decrease, it increases the risk of the market. Changes in consumer behavior will lead to a higher risk
for the business.

The Covid-19 pandemic has affected millions of workers in Indonesia. The Central Statistics Agency
(BPS) noted that 29.12 million working-age people were affected by the pandemic. The details:

1. Unemployment not absorbed by the employment opportunities affected by Covid-19

reached 2.56 million people

2. Not a workforce of 0.76 million people

3. Not working because of being affected by Covid-19 by 1.77 million people

4. Working with reduced working hours, reaching 24.03 million people, as of November

Meanwhile, a survey conducted by the Ministry of Manpower (Kemnaker) and the Institute for Devel-
opment of Economics and Finance (INDEF) stated that 88% of companies were affected by the pan-
demic in the last six months (November 2020). Nine out of 10 companies in Indonesia were directly
affected by the pandemic.

The survey was conducted online, including telephone and email, to 1,105 companies in 32 Indone-
sian provinces. The method used is 95% probability sampling and a margin of error (MoE) of 3.1%.
Based on the survey, Micro, Small, and Medium Enterprises (MSMEs) decrease in demand, production,
and profits by up to more than 90%17.

While the number of SMEs impacted is high, market risks have increased, and operations are af-
fected by adjusted business procedures and delayed expansion and investment plans. The AFTECH
survey on the impact of COVID-19 shows 70% of respondents said their income was affected by
the pandemic.

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 Figure 13. Fintech Lending Borrower Profile/Dailysocial.id 2020
22.0%
High School/University Student 33.3% Productive
10.0% Consumptive
19.3% Sharia
Government Employee/Teacher 42.3%
10.0%
32.1%
Homemaker 51.3%
10.0%
24.8%
Professional Workers 39.7%
10.0%
38.5%
Full time Workers 71.8%
50.0%
27.5%
Part time workers 55.1%
20.0%

35.8%
Labor/Farmer/Fisherman 37.2%
20.0%
35.8%
SME-offline 64.1%
70.0%
42.4%
SME-online 30.8%
40.0%
3.7%
Others 0.0%
0.0%

Based on the AFPI and Dailysocial survey, the report stated that SME is one of the largest fintech lend-
ing services users. The fintech sector has adopted various mitigation measures: (1) reducing employ-
ees’ number, (2) implementing unpaid leave and salary cuts, better cash management, (3) postponing
business expansion plans, and (4) changing the business model to survive the economic downturn.
Niki Santo Luhur, Chairman of Indonesian FinTech Association (AFTECH), has conceived it.

Since increasing the number of COVID-19 cases in Jakarta, the government has started implementing
large-scale social restrictions (PSBB). This condition causes the economy to experience quite drastic
changes, given that people’s behavior is slowly changing.

The pandemic has also brought about significant changes in the fintech industry, such as adaptation
to the workforce, market risk, and technology projections to tackle the friction.

“ “One of the business problems faced by fintech lending during

the pandemic was managing risk. When the economic situation is
down, the level of risk will increase. The current situation is the first
time for fintech lending to experience this condition. There will be
challenges for the industry. All industry players must be more
observant in managing strategies to survive.”

Adrian Gunadi, Co-Founder & CEO of Investree and Chairman

of the Indonesian Fintech Lending Association (AFPI)

Therefore, this report is provided with additional data to identify the impact of COVID-19 and mitiga-
tion measures taken by players in the fintech industry. The following are some of the strategies faced
by players during the pandemic.

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 Strategy & Innovation on Pandemic
New working styles
Since Covid-19 became a global pandemic (March 11, 2020), and governments in various countries
implemented isolation measures to prevent it, the working culture of workers in multiple companies
has changed dramatically, from ‘working together’ in an office environment to work individually‘ or
remotely from home.

Almost all respondents in the interviews also admitted to running Working from Home (WFH)
during this pandemic. One of them is as stated by Dickie Widjaja as Chief Information Officer Inves-
tree and Deputy Secretary General of the Indonesian Fintech Association (AFTECH). Given that their
primary business has been online or digital-based since the beginning, they are not constrained by
this shift. WFH reduces the commuting time for employees who live far from the office. In the future,
policymakers in the company will also consider combining the WFH and WFO (Working from Office)
working models.

Figure 14. Companies Operational During the Pandemic/BPS, 2020

8.76%
58.95% Stop operating
Operate as usual

5.45%
Operate half WFH (remote)
2.05%
Fully operational WFH

24.31%
Operate with
reduced staff
capacity

Physical distancing in several

areas has an impact on com-
0.49% pany operations. The following
Operating even is the attitude of the company
over capacity regarding these conditions.

Since the pandemic, many companies have implemented work from home. Surprisingly during this
pandemic, productivity has increased and is much more effective. Since the team is spread across
Bogor, Depok, and surrounding areas, they don’t need to spend time commuting. Remote work
makes it more effective.

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 Product Diversification
Limitation in activities causes consumers to look for other alternatives to still meet their needs. This be-
havior triggers a change in trends in the form of consumer behavior during the pandemic.

Based on a survey conducted by PwC, after the COVID-19 outbreak, there were five significant increas-
es in Indonesian consumer spending, health products (77%), foodstuffs (67%), entertainment & amp;
media (54%), food collection/delivery (47%), and independent skills activities (DIY)/home improvement/
gardening (32%).

Figure 15. Best Selling Products Online Shopping During Pandemic (Feb-Apr 2020)/Katadata 202018

Clothing, shoes & accessories 76

Beauty, cosmetics & health 62

Restaurant & take away 55

Electronics & offices 46

Food supply 44

Media 43

Banking/financial services 43

Entertainment tickets 43

Pharmacy 38

Tickets & travel 38

Room & interior 31

Sports & fitness 26

Baby Toys & Equipment 25

Automotive supplies 22

Pet 19

0 20 40 60 80

Fintech lending as a financial service provider for SMEs was also indirectly affected. The latest trend is
driving new business insights for business owners. Although some businesses have experienced a de-
cline in demand, other sectors such as health and care have increased.

Fintech lending players can adapt to this trend by issuing various loan products to optimize the serving
SME. Koinworks has done this. Several partners who have offline businesses have experienced much
decline in turnover. They overcome this by appointing a dedicated team to help with innovation.

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Since 2016, Koinworks has projected to fund digital SMEs, which is currently the most extensive port-
folio. Jonathan Bryan conveyed this as Chief Marketing Officer of Koinworks. The online business owner
can be relied on today. Several requests for products in the market from partners also showed an in-
crease. For example, health and body care products. The new trend is an insight that can be utilized by
serving partners in these areas.

In this case, Koinworks does not only consider each SME’s business sector to diversify its loan products.
They also consider the types of loans based on the media used by each SME, both online or offline.

Adjustments to new trends

Changes in business trends are inevitable during the
pandemic. In addition to a decline and an increase
in several product and service sectors, consumers
have also drastically switched shopping online.
Reporting from Tirto, the number of e-commerce
subscribers has increased by 38.3 percent during the
Corona COVID-19 Pandemic period, which began
from January to July 2020. The daily transactions also
increased to 4.8 million, and the percentage of new
consumers up to 51 percent during the pandemic
period. According to Exabytes, the rapidly growing
e-commerce growth is caused by consumer behavior
changes that meet their daily needs by shopping on-
line, especially during the Large-Scale Social Restric-
tions (PSBB) period.
The changes that have occurred have not only
harmed the fintech sector. The transition of eco-
nomic activity online is an opportunity for each
company. These opportunities could be released if
it is not appropriately addressed. The following are
some examples of fintech companies facing chang-
ing business trends.
The pandemic has become a catalyst for digital
transformation. Chiragh Kirpalani, as COO of Ayo-
connect, conveyed the user-based enhancements of
their partners. The increase in user-based is none
other than the billing providers’ awareness to start
shifting to digital. Ayoconnect noticed this digi-
tal shifting process as an opportunity to help their
transaction process. From January to the end of
September, Ayoconnect’s transactions are increas-
ing by at least 35% every month. Especially during
the pandemic, transactions increase in the system.
Based on this changing trend, Ayoconnect is
more actively communicating with their chan-
nel partners to prepare products of interest in
the future. Along with changing market con-
ditions, channel partners are also starting to
understand their users’ needs. The change in
trend helped Ayoconnect to discover specific
points were where the fever was rising and
could become opportunities.
From the investment aspect, the public also
shows an interest in investing. During the
pandemic, Pluang had a reasonably large in-
crease in users. The product that has experi-
enced a significant increase in demand is gold.
Claudia, CEO of Pluang, estimates that people
are increasingly thinking about ways to store
assets because of this pandemic, one of which
is by buying gold.
As an investment platform, Bizhare has made
innovations during this pandemic, especially
from the investor side. Heinrich Vincent con-
veyed the statement as CEO of Bizhare. If pre-
viously the minimum purchase of shares was
5 million per user, now it has been converted
to Rp50,000 per share. Each user can invest,
starting from Rp100,000. It aims to maintain
and expand the market as an investor. The
decline in share price is also considered to
increase the inclusiveness of the investment
ecosystem in Bizhare.

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 Technology as a solution: Diminish the market risk
As already mentioned, market risk also increases with
changes in the business system due to the pandem-
ic. In the lending sector, players are starting to think
of various strategies to minimize risk. Strengthening
technology is one of the options.
The pandemic has made fintech P2P lending a role
in increasing financing distribution to specific sectors.
Koinworks noted that since the easing of Large-Scale
Social Restrictions (PSBB), the demand for loans has
increased up to 67%. The raise is due to the high en-
thusiasm of the community in applying for loans to
expand businesses. The instability condition produc-
es new risks that need to be anticipated.
OJK noted that the level of non-performing loans
or default on 90 days loan repayments (TWP90)
of fintech lending has continued to skyrocket since
the Covid-19 pandemic. In February 2020, the fig-
ure was still around 3.92 percent. As of last August,
the TWP90 rate of 157 fintech lending providers on
average had reached 8.88 percent. Chairman of the
Indonesian Fintech Lending Association (AFPI) and
Co-Founder & CEO Investree, Adrian Gunadi re-
vealed this in a virtual discussion with Pefindo Credit
Bureau, Thursday 15th October 2020.
Adrian explained that fintech lending platforms
are not enough to face the pandemic even al-
ready have excellent internal credit scoring. Ac-
cording to him, the urge to expand lending from
P2P lending must balance maintaining quality to
avoid the potential risk of subpar returns under
current conditions.
Pandemic is arguably the most effective acceler-
ator of digital transformation in a business. The
statement is in line with what was conveyed by
Bernardi Susastyo as Chief Commercial Officer
of Advance.ai. As the C-level of a technology
provider company, he said API or websaas busi-
ness volume slowed down even though demand
actually still strong, but businesses went into
cash preservation mode in the first months of
pandemic outbreak. By mid of this year, API call
volume returned to normal and soon exceeded
pre-pandemic levels. Because financial institu-
tions now were fast-tracking digitizing business
processes, especially from the KYC aspect, one
that is quite popular is digital id verification for
opening an account without coming to a branch.

Helping small business: Boost up digitalization

Covid-19 tested SMEs’ resilience to survive and thrive in a pandemic situation. Digital transformation will
be an essential part of their stability. One option that can be done is to adopt digital services for every
funding and business transaction. When these SMEs digitally facilitated, access to capital can also be
through alternative facilities online.

Since the number of E-commerce subscribers has increased by 38.3 percent during the Corona COVID-19
Pandemic period, millions of SMEs in Indonesia have to expand their reach digitization. However, to sup-
port the acceleration of the digital transformation of SME players, participation from various parties is
needed, not only the government itself but also the private sector’s support.

Several fintech players have admitted to releasing products to help process their merchant business
from the payment aspect. DANA Indonesia, represented by Rangga Wiseno as the Head of Product,
noticed a massive movement from offline to online transactions.

DANA tries to map the business pillars with the growth potential when the pandemic hits and which
ones will be affected. Through this, DANA developed a particular strategy to support stores or mer-
chants accustomed to being offline to understand online.

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During the pandemic, DANA launched several products to support merchants, said Rangga Wiseno,
DANA Senior VP Product. First, DANA merchants can accept orders via WhatsApp. Merchants will for-
ward the QR to consumers to be scanned via DANA or other wallets.

Figure 16. DANA QR Code through WhatsApp

Make order via WhatsApp

Customer Seller

Provide a DANA QR Code via

WhatsApp for Payment

Second, shifting to different products such as peer to peer, transfers, and payments to other platforms.
Like cash withdrawals at Alfamart. Third, supporting the customer. Apart from a business perspective,
DANA also has a program to support the government, the support for the Shopping at Warung Tetang-
ga. The public can register their neighboring stalls to collect. The Ministry of Cooperatives will use the
data to deliver donations.

Midtrans also takes an active role in encouraging the digitization of payments with various payment in-
novations, especially for MSMEs, through the following designs:

1 2

Exemption of transaction fees through the Zero
Fee Program, Midtrans waives online transaction
fees (Merchant Discount Rate) specifically for new
merchants. More than 11,000 new businesses
have signed up for Midtrans since July 2020.
Instant payment link via Payment Link allows
merchants to directly share payment links with
customers via SMS, chat applications, email,
and social media. Currently, Payment Link ac-
cepts payments via credit cards, debit cards,
and various electronic money via QRIS codes.
Through Payment Link, small businesses can
accept online payments without the need to
build their website. Since the pandemic, tens of
thousands of payment links have been shared
via Payment Link every month via chat, email,
and social media applications.

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Future Projection
The OJK is preparing six strategic policy initiatives in 2021 to face various developments and challenges
in the financial services sector, including accelerating national economic recovery. Those strategies were
conveyed by the Chairman of the OJK Board of Commissioners, Wimboh Santoso, when opening the
2021 OJK Strategic Work Meeting, which was held virtually during his visit to Labuan Bajo, East Nusa
Tenggara. The six strategic 2021 initiatives are:

1. Development Direction and Supervision of 4. Expanding Access to Finance in the Frame-

the Financial Services Sector (SJK);
2. Sharpening Information Technology-Based
Integrated SJK Supervision;
3. Acceleration of digitalization and optimization
of digital ecosystems and digital literacy to
support National Economic Recovery;
work of Supporting MSME Growth and Na-
tional Economic Recovery;
5. Strengthening the resilience and competi-
tiveness of the FSS; and
6. Sustainable Finance Development.

These six strategic 2021 initiatives will serve as
a reference for OJK in implementing various OJK
2021 policies, focusing on encouraging the OJK to
become a catalyst for accelerating national eco-
nomic recovery.
It is undeniable that today’s rapid development is
beneficial for people to carry out their daily activ-
ities. But on the other hand, the ease of service is
also accompanied by gaps in security threats, main-
ly because these technologies’ development goes
beyond existing regulations.
At this point, the Financial Services Authority (OJK),
as a regulatory, supervisory, examining, and inves-
tigating agency for the financial services industry in
Indonesia, requires much innovation in regulatory
development. The supervisory function mandated
by the OJK must reach technological aspects that
have now become an integral part of the financial
industry itself.
One of the external support needed is from the
legislative body, for example, by accelerating the
Personal Data Protection Act and the Cyber Secu-
rity and Resilience Law. The two laws can improve
regulations based on the principles of Same Busi-
ness-Same Risks-Same Rules and strengthen tech-
nology-based supervision for all financial service in-
stitutions (LJK) and fintech companies in Indonesia.
The Cyber Security and Resilience Law is also
expected to increase the regulatory sandbox
and optimize the role of the SRO (Self-Regula-
tory Organization). The SROs collaborate with
the OJK to oversee market conduct AFTECH (In-
donesian Fintech Association) and AFPI (Indo-
nesian Fintech Lending Association).
Meanwhile, in terms of development, fintech in
Indonesia still has enormous potential, accord-
ing to the OJK. According to World Bank data
(2018), funding needs are always extensive and
cannot be fully met by existing institutions. Data
in Indonesia shows that the funding gap reaches
around Rp2,300 trillion. Therefore, innovation in
the fintech ecosystem can be the main alterna-
tive in meeting these funding needs.
OJK, through Tris Yulianta OJK, as Fintech Super-
vision and Licensing Director, hopes that fintech
can develop together with the existing financial
services industry and complement other digital
initiatives that are also growing in Indonesia.
Service quality and industrial quality need to be
improved with a shared commitment to collabo-
rate so that they are expected to contribute more
optimally to the Indonesian economy.

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 Enhancing current technology
The implementation of new technology is one of the hallmarks of a startup or fintech company. Aside
from providing benefits in efficiency, technology offers some alternative approaches to solving problems.
Given the increased market risk, some of the anticipations that have been conducted by regulators. The
fintech players are also not standing still.

Several interviewees admitted the fintech players were very aware of the potential for transformation
in the future. They have prepared several plans, especially developments in technology.

“
“Investree will focus on developing machine learning technology
from the credit scoring that is currently developing. We plan to
facilitate interaction with users, both borrowers, and lenders. We
also aim to reduce friction, so the registration and interaction
process will become seamless.”

Dickie Widjaja, Chief Information Officer of Investree and Deputy

Secretary General of the Indonesian Fintech Association (AFTECH).

They have also projected to develop chatbots. Next up is managing risk. Given that the pandemic
situation has changed many economic and business landscapes, some risks will change. The stakes
here include non-performing loans, as well as the possibility of fraud.

Asetku plans to improve legal infrastructure and compliance. They intend to grow higher and sustain lon-
ger. Because it will affect the Asetku business model to comply with regulations that will emerge in the
next year (2021), some legal aspects need adjustments in terms of business processes in various lines of
Asetku. They also collaborated with other financial service institutions and undertook a borrower diver-
sification program to have more diverse profiles.

In the next 3 or 4 years, P2P lending, payments, and even e-commerce will be widely using AI tech-
nology. Technology companies still have a vast opportunity to grow and innovate. Most of the access
or transactions made in digital banking or digital apps will use facial recognition. Bernardi Susastyo, as
Chief Commercial Officer of Advance.ai, stated it.

The potential of Indonesia’s market is still broad, realizing two-thirds of the population is still unbankable.
The possibility of this unbankable population is mostly from SMEs. The conditions are an opportunity to
boost the economy according to a macroeconomic perspective. Both fintech and banking focus on allo-
cating funding for micro SMEs.

Those sectors will also compete to use several technology services to improve their business processes.
The OJK or BI is also discussing this private data. Because fraud is still high, technology providers exist in
this ecosystem. This company is helping the industry to tackle it.

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 Helping SMEs to boost the economic
SMEs are still an essential part of fintech in the future. Even before the pandemic hit, SME was always
one of the main segments served by fintech. Given that SMEs play a large role in future economic
growth, some fintech players admit that they will still develop SME products.

The payment sector previously stated that during this pandemic serving SME merchants was still a
priority. DANA and Midtrans launched features to facilitate digitization in their business processes.

The lending sector also shows an increase in loan demand. One example comes from Investree, as
stated by Adrian as CEO of Investree. In terms of market demand, Investree has experienced an in-
crease in demand. SMEs to become one of the users needs to be supported. Indirectly, they are im-
mensely affected by social distancing, less contact, and various other restrictive policies.

In the future, Bizhare will continue to develop its business. They are developing an integrated invest-
ment ecosystem; one of the targets is SMEs. Because the OJK is currently working on an ongoing se-
curity crowdfunding, in the future, this will allow Bizhare to provide space for SMEs to issue not only
shares but also bonds or bills. “Bizhare Syariah” will be realized later.

Figure 17. Small and Midsize Enterprises are at an Inflection Point on Digital Adoption

What method of payment do What payment method do you accept

you accept today?
today, and how likely are you to accept
Accept cash only
digital payment in future?
Likely to accept digital
Accept cash and digital
24%
55%

75% 70% 46%

Source: Google, Temasek and
15% Bain & Company (2019)
25% 30% 30% 30%

2015 2018 2020 2022

Expanding Business Abroad

The idea of expanding their business overseas has emerged from some of the fintech players inter-
viewed. For example, Investree is awaiting operational permits in the Philippines and Thailand. They
started through joint ventures with local partners. The local partners play a role in assisting operations
related to regulations, markets, and other business aspects.

Payfazz is also preparing the same thing. They had received an invitation from the Vietnamese govern-
ment to present their products, as stated by Hendra Kwik, CEO of Payfazz. Even though Vietnam has
a similar business landscape to Indonesia, there are still considerations for budget allocation, talent,
and the pandemic’s challenges. These challenges are one of the concerns for not expanding shortly,
but rather a long-term plan. Payfazz is still focused on developing business in Indonesia, considering
the enormous market potential.

Xendit, PasarPolis, Dana Cita, are a list of Indonesian fintech that have expanded overseas. Even
though the expansion sounds promising, some fintech players admit that they still want to explore the
domestic potential.

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 Strategic Collaboration
Collaboration between financial services is still a trend in the future. The role of fintech is still huge to be
a solution for accelerating financial inclusion from now on. Collaboration with fellow financial institutions
also still has opportunities for mutual benefit.

An example is fintech collaboration with banks. In lending, the partnership is expected to form strong
synergies and provide economic benefits for MSME players. Both fintech and banks have their market
scope within different approaches.

Although fintech can do many things out of the bank, some financial services can only be done by banks,
and vice versa. Both of them need collaboration to complement each other.

One example is the allocation and mechanism of bank loans. Anton Hermawan, as EVP, Head of Dig-
ital Business Development CIMB Niaga said, before CIMB Niaga collaborated with fintech, it had not
reached all SME segments. However, since collaborating with CIMB Niaga, at least they have done:

1. E-money top up, serving the transactional aspect.

2. Provides credit to customers whose products cannot be converted, such as loans without col-
lateral and customers who do not have a credit history. CIMB Niaga performs loan channeling
through the fintech lending.

3. CIMB Niaga collaborates with aggregator to serve payment fintech integration. For example,
CIMB Niaga collaborates with e-commerce to provide a direct debit payment feature in e-com-
merce platform.”

“
“Fintech lending has a different underwriting process from banks.
They did it efficiently and a bolder risk appetite. These methods are
different from what conventional banks do. The method used by
conventional banks cannot reach certain customers. So, we collab-
orate with them to attain those unreached costumers.”

Anton Hermawan, EVP, Head of Digital Business

Development CIMB Niaga

Fintech will get a loan channel, and banking is going to implement new technology. Both parties will get
the opportunity to acquire less-risk users. Andrisyah Tauladan as CEO of Asetku, said that there would
be partnerships with more financial service institutions in the next three years. The projection is part of
a diversified borrower program or has borrowers with a more diverse profile.

Through fintech integration, it also accelerates digital transformation in financial services. Eddi Danusa-
putro, as Chief Executive Officer of MCI, has already conveyed it. As a player in Venture Capital who is
still part of a bank, MCI often brings potential startup/fintech players with Bank Mandiri business units.
MCI will play an accelerator’s role to meet the fintech/startup vision with the bank Mandiri.

MCI will be measured based on the KPI of each potential startup/fintech. They will also be making sure
how inline their vision and mission is to support the business unit of Bank Mandiri. Collaboration carried
out by VCs from banks is not only in the form of investment but also in the synergy between businesses.

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 Market consolidation
The fintech business model in Indonesia is very diverse. The number will continue to grow in line with the
enormous potential market in Indonesia. Currently, the payment and loan sector has started to show its
top player. Meanwhile, other fintech segments still have the potential to consolidate the market.

In the future, the number of players will continue to increase, but the competition will be more stringent.
For example, e-wallets, which used to have many players, now have the highest market share. Market
consolidation will still be one of the directions for the growth of the fintech ecosystem.

The latest POJK plans some articles related to consolidation and mergers. The statement was conveyed
by the Deputy Director of Fintech Regulation, Research, and Development of OJK Munawar Kasan in a
virtual discussion with the Indonesian Fintech Lending Association (AFPI) in November 2020.

According to him, the potential for merger and acquisition actions in every company is always there,
including fintech. The presence of this regulation in the future is expected to strengthen the industry’s
quality in capital adequacy, business processes, and the ecosystem.

Continuing his statement, Munawar added that the regulator also plans to increase the minimum capital
limit to establish a fintech company from Rp2.5 billion to Rp15 billion. In 2019, OJK recorded 164 fintech
but reduced by 10 to 152 players as of December 2020.

Summary
There are two points behind the changes in the financial sector in Indonesia during the pandemic. First, a
change in behavior and digital causes customer needs changes—an increasingly online shopping trend.
On-demand services become everyday. This demand requires industry players to create new products
following customer attractions.

Second, there is the digital acceleration caused by the pandemic. The pandemic accelerated unrealized
plans. Industry agriculture, education, and healthcare are experiencing an increase. There is an industry
that goes down, but market behavior will change. The market strength will eventually recover. Some
industries need a shorter time to recover, and some sectors need a longer time.

The role of finance becomes a blur because all industries eventually need financial services. At least
three things will not change in financial services, as conveyed by Markus Liman Rahardja VP of Investor
Relation & Strategy of BRI Ventures :

1. Value saving, in the form of savings or investment.

2. Value transfer and there is the payment, transfer of money, and remittance.
3. Access to credit, formerly known as credit card and today known as pay later.

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Regulator

1 OJK Tris Yulianta, OJK Fintech Supervision and Licensing Director

Fintech Players
2 Investree Adrian A. Gunadi as Co-Founder & Chief Executive Officer
Dickie Widjaja as Chief Information Officer
3 Koinworks Jonathan Bryan as Chief Marketing Officer

4 Asetku Andrisyah Tauladan as Chief Executive Officer

5 Ayoconnect Chiragh Kirpalani as Founder and Chief Operational Officer

6 DANA Rangga Wiseno as the Head of Product

7 ShopeePay Eka Nilam Dari as Head of Strategic Merchant Acquisition

ShopeePay
8 Pluang Marcellina Claudia Kolonas as Founder

9 Midtrans Erwin Tanudjaja as Chief Executive Officer

10 Payfazz Hendra Kwik as Chief Executive Officer

11 Bizhare Heinrich Vinvcent as Chief Executive Officer

12 Advance.ai Bernardi Susastyo as Chief Commercial Officer

Bank and CVC

13 CIMB Niaga Anton Hermawan as EVP Head of Digital Business

Development

14 BRI Ventures Markus Liman Rahardja as VP of Investor Relation &

Strategy

15 Mandiri Capital Indonesia Eddi Danusaputro as Chief Executive Officer

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04. Consumer
Perspective of
Fintech

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Consumer Perspective of
Fintech
Demography
To understand more about the consumer perspective on fintech and its products, DSResearch conduct-
ed an online survey involving 1434 respondents nationwide. Those consumers can be defined with
demographic profile as below:

Figure 18. Demography of Fintech Users (n=1434)

Gender Age Group

<20 y.o 12.9%

Female Male 20-29 y.o 52.2%

42.0% 58.0% 30-39 y.o 27.9%

40-49 y.o 5.9%
>50 y.o 1.2%

SEC Cities
(Monthly Household Expenditure)
SEC A (>Rp7.5 million)
26.2% Jabodetabek 24.3%

SEC B (Rp3-7.5 million)

60.3%
Other
61.0% Bandung 5.3%
SEC C (<Rp3 million)
13.5% Surabaya 3.4%
Medan 3.1%

Makassar 2.2%
Balikpapan 0.7%

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Banked & Unbanked Society
Figure 19. Bank Account Users (n=1434)

I’m actively use 1 bank account

I’m actively use 2 bank accounts
24.5% I’m actively use 3 bank accounts
I’m actively use more than 3 bank accounts
I’m not actively using any bank accounts

48.1% 7.3%

5.6%
14.5%

Figure 20. Mobile Banking App Users (n=1434)

I’m not actively using any mobile banking apps

44.4% I’m actively use 1 mobile banking app
I’m actively use 2 mobile banking apps
I’m actively use 3 mobile banking apps
14.4% I’m actively use more than 3 mobile banking apps

34.3% 3.8%

3.1%

Almost 90% of people have been using bank accounts nowadays. While the usage of mobile bank-
ing apps has reached 65.7%. Compared with the data in 2019 (60.8%), it shows a bit increase in
usage of mobile banking apps. It can be caused by the increase in cashless payment usage in this
pandemic period.

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Fintech’s Public Perception
Figure 21. Awareness of Fintech (n=1434)

52.3%

20.6%
18.5%

8.6%

I’m not really aware I’m quite aware I’m slightly aware I’m really aware
about FINTECH about FINTECH of FINTECH about FINTECH

Based on the survey result, more than 50% of people aren’t really aware of FINTECH at a first impres-
sion. The gaps in understanding between age groups can be seen by age group breakdown, 70.8%
of people below 20 years old aren’t really aware of FINTECH. Moreover, those who belong to the SEC
group, SEC of A & B class consider being more aware of FINTECH perception.

Figure 22. Awareness of Fintech by Age Group Breakdown (n=1434)

2.7%
I’m really aware 9.2%
about FINTECH 11.3%
3.6%
5.9%

11.4%
I’m quite aware 20.5%
23.3%
about FINTECH <20 y.o
28.6% 20-29 y.o
29.4% 30-39 y.o
40-49 y.o
15.1% >50 y.o
I’m slightly aware 17.6%
of FINTECH 21.5%
17.9%
23.5%

70.8%
I’m not really aware 52.7%
about FINTECH 44.0%
50.0%
41.2%

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Figure 23. Awareness of Fintech by SEC Group Breakdown (n=1434)
67.5%
SEC A (>Rp7.5 million)
SEC B (Rp3-7.5 million)
SEC C (<Rp3 million)
55.8%

36.4%

28.5%
19.7%
19.4% 18.8%
15.4%
6.7% 14.9%
10.8%
6.0%

I’m not really aware I’m quite aware I’m slightly aware I’m really aware
about FINTECH about FINTECH of FINTECH about FINTECH

a. Consumer behavior on pandemic

DSResearch conducted online public surveys to figure out how the usage and attitude of the current
market in understanding more about fintech products. Here are some results:

Figure 24. Total Awareness of Fintech Products (n=684)

Digital Wallet 82.2%

Paylater 72.5%

Investment 57.3%

Working Capital Loan 45.3%

Insurtech 40.9%

Payday Loan 32.7%

Goods Ownership Credit 29.5%

Equity Crowdfunding 15.2%

Remittance 10.2%

Don’t know 3.4%

More than 80% people aware about Digital wallet, Paylater, and Investment as fintech products. It
accounts for 82.2% of people who are aware of digital wallet, 72.5% who are aware of paylater, and
57.3% who are aware of investment. Meanwhile the awareness of remittance only 10.2%.

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 Figure 25. Used Fintech Products (n=661)

Digital Wallet 70.7%

Paylater 45.2%

Investment 28.4%

Insurtech 13.0%

Payday Loan 12.0%

Working Capital Loan 11.8%

Consumer Loan 9.5%

Equity Crowdfunding 5.0%

Remittance 3.8%

Don’t know 11.6%

Digital wallet is the lead of ever used fintech products by users nationwide. Then insurtech and pay-
day loan got the fourth & fifth rank for ever used fintech products.

Figure 26. Used Fintech Products by Gender Group Breakdown (n=661)

71.4%
69.6%

47.5%
43.6%

30.9%
25.0%
15.3% 14.0% 12.7% 12.7%
9.8% 6.5% 9.1% 10.5%
5.2% 5.1%
2.9% 1.8%

ech ing et ment Loan ital Lo

an aylater tance oan
Insur t dfund l Wall Invest Payda
y
g Cap
P Remit mer L
Crow Digita r k in Consu
Equity W o

Male Female

Followed by gender breakdown’s rank, it can be found that there is a little gap which female mostly
used paylater than male. And for other fintech products still dominated by male users.

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 Figure 27. Consideration Factors of Using Fintech Products (n=584)

Suitable to people needs 70.7%

Trusted Products 68.3%

Saving time 67.8%

Easy to be used 60.6%

Functional 57.4%

Alternative of financial services 56.8%

Detail information of products 46.1%

Complete product’s option 38.0%

Popular product 28.8%

People recommendations 20.9%

Others 1.4%

The top 3 considering factors of using fintech products are suitable for people needs (70.7%), trust-
ed products (68.3%), and saving time (67.8%). Only 20.9% consider using fintech products because
of recommendation from other people.

1. Insurtech

Figure 28. Total Awareness & TOM Insurtech (n=280)

60.4%

40.7%
38.2%
35.7%
32.9%
25.0% 23.2%
22.9%
18.9%
15.0%

0.4% 1.1% 1.1% 0.4%

0.4% 0.0% 0.0% 0.0% 0.0% 0.0%

Polis remi iri As u r a o

nsiku.i
d
Pasar RajaP AturD
u it Jagad Premir ady
As u r a Future Qoala Weplu
s.i d

Top of Mind Awareness Total Awareness

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 Figure 29. Used Insurtech Platforms (n=252)
40.9%

33.7%

18.7% 17.9% 17.1%

15.5% 12.7%
13.5% 13.1%
10.3% 9.9%

7.5%

emi ady o s. i d ow
iku.idPasarPolis Jagadiri AturDuit RajaPr Future As u r a Premir Qoala plu Fus
e ’ t kn
As u r a
ns We Don

RajaPremi got the third rank of insurtech awareness, and Asuransiku.id leads the awareness with
a percentage of 60.4%. According to fintech users who use insurtech this year, more than 30% of
users used Asuransiku.id, then followed PasarPolis (18.7%), and Jagadiri (17.9%).

Figure 30. Used Insurtech Platforms by SEC Group Breakdown (n=252)

36.0%

30.9% 31.6%

26.6%
25.5%
23.4%
21.3%
19.1% 18.1%
15.8% 14.9% 14.4%
15.1%
13.7% 13.8%
12.9% 12.8%
11.5% 10.8%
9.6%
8.6% 8.6% 7.2%
5.3% 5.3% 5.3% 5.3%

0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

i
d it ready gadiri Polis o Qoala jaPrem plus.id use ra
nsiku.i AturD
u Futu Ja Pasar Premir Ra We F As u
As u r a

SEC A (>Rp7.5 million)

SEC B (Rp3-7.5 million)
SEC C (<Rp3 million)

By comparing between SEC group, Asuransiku.id used by people from all SEC group (A until C).
Meanwhile PasarPolis users used by people with SEC A.

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 2. Equity Crowdfunding
Figure 31. Total Awareness & TOM Equity Crowdfunding (n=104)

67.3%
64.4% 62.5%

12.5%
6.7%
1.9%

Santara CrowdDana Bizshare

Top of Mind Awareness Total Awareness

For top of mind Equity Crowdfunding startups, Santara leads with a percentage of 12.5%. And for
total awareness, there is a bit difference between 3 startups, Santara got 67.3%, CrowdDana got
64.4%, and Bizhare got 62.5%.

Figure 32. Used Equity Crowdfunding Platforms (n=94)

47.9% 46.8%
44.7%

24.5%

CrowdDana Bizhare Santara Don’t know

Figure 33. Used Equity Crowdfunding Platforms By Gender Breakdown (n=94)

56.9%
51.7% 52.8%

43.1%
33.3% 33.3% Male

Female

Santara CrowDana Bizshare

CrowdDana gets the highest percentage of ever used equity crowdfunding (47.9%). There is a slight
difference in preference of equity crowdfunding platforms used by gender groups. The Female used
Bizhare, while the male used CrowdDana and Santara.

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 3. Digital Wallet

Figure 34. Total Awareness & TOM Digital Wallet (n=562)

97.2% 96.3% 95.6%
83.5%

64.6%

48.8%
40.6% 39.9%
36.8% 30.8% 37.0% 32.6%
23.1%
20.6%

3.9% 2.8%
0.4% 0.2% 0.0% 0.0%
0.0% 0.0%
ja ePay Jenius n gku
GoPay DANA OVO LinkA Shope Paytre iSaku DOKU Saku
ku Uan

Top of Mind Awareness Total Awareness

DANA and GoPay compete for the top 2 positions in total awareness of digital wallet startups. But
DANA leads the top of mind awareness (36.8%).

Figure 35 Used Digital Wallet Platforms (n=562)

87.0%
80.4%
75.6%

53.2% 47.5%

14.2% 10.7%
7.5% 6.6% 5.9% 4.6% 0.7%

e Pay
GoPay OVO DANA Shope LinkA
ja
Jenius iSaku DOKU Paytre
n ku gku ow
Saku Uan ’ t kn
Don

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 Figure 36. Used Digital Wallet Platforms by Gender Group Breakdown (n=562)

87.7% 87.6% 82.9%

79.6% 78.1%
73.5%
61.1%
51.5%
48.1%
42.7%

15.1% 13.2% 12.4%

9.0% 4.7% 9.6% 7.4% 5.6%
5.6% 6.8% 5.2% 3.8%

GoPay OVO DANA ePay ja Jenius DOKU u Uangk

u
iSak
u tren
Shope LinkA Sakuk Pay

Male Female

GoPay dominates the usage of digital wallets in 2020 (87%). While LinkAja got fifth place with a
percentage of less than 50%. According to gender group, GoPay users mostly male, but OVO is
mostly used by females.

Figure 37. Frequency Used Digital Wallet Platforms (n=558)

Everyday
4-6 times/month
38.1% 2-3 times/month
1 time/month
31.9% 2-3 times/3 months
31.3% 1 time/3 months
28.1%
25.2% 24.1% 25.1%
21.9% 21.7% 21.7% 22.1% 22.1%
22.1%
19.5%
17.9%
15.7%
12.5%
12.6% 12.7%
9.6% 9.9%
8.0% 7.0%
7.9%
5.9%5.5% 5.5% 6.4% 5.0%
3.0%

GoPay OVO DANA ShopeePay LinkAja

According to the frequency of digital wallet usage, there is no difference between the top 5 ever
used digital wallets. Which ShopeePay users leads with percentage 38.1% which used for 4-6
times/month.

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 Figure 38. Consideration Factors Mostly Use Digital Wallet (n=420)

Suitable to people needs 74.3%

Saving time 72.1%

Trusted Products 71.7%

Easy to be used 66.2%

Functional 61.7%

Alternative of financial services 59.3%

Detail information of products 46.0%

Complete product’s option 39.3%

Popular product 29.5%

People recommendations 20.5%

Others 1.0%

Besides trusted products, people said a digital wallet is a fintech product that also saves time and is
suitable for people’s needs. Only 20.5% used it because of other people’s recommendations.

Figure 39. The Most Used Media to See the Ads of Digital Wallet (n=393)

Social media 85.8%

TV 59.5%

Articles on the internet 46.8%

From mouth to mouth 20.9%

Billboards/Banners 17.0%

Newspapers/Magazines/Tabloids 12.2%

Broadcast messages in online chat app 11.2%

Brochures/Pamphlets 9.9%

Exhibition 7.9%

Radio 6.6%

Others 0.8%

According to people who mostly seen digital wallet ads, there are 85.8% of people who mostly see
ads of digital wallet products from social media. And only 11.2% get broadcast messages in online
chat app about digital wallet ads.

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 4. Investment
Figure 40. Total Awareness & TOM Investment (n=392)

65.8%
Top of Mind Awareness Total Awareness

50.3%
47.7% 46.7%

31.9% 31.6%
24.0%
21.7% 21.2%
17.6%
14.8%
6.6%
1.8% 1.5% 2.3% 1.3% 0.8% 0.5%
0.0% 0.0%

sa duit Pluan
g remier ve st
Bibit Barek E-mas Tanam Ajaib Indop St o c k
bit e Raiz In
Invise

Compared to the Fintech Report 2019 data, Bibit gets increasing awareness from third place (49.9%)
to be the first place (65.8%) this year.

Figure 41. Used Investment Platforms (n=382)

35.1%
30.4%
21.2% 20.9%
16.2%
14.7% 12.6%
9.9% 9.4%
7.6% 6.3% 6.3% 6.0%

r
E-mas Barek
sa duit Pluang Ajaib remie Invisee bit
Bibit Tanam Indop St o c k Xs a v
er
Ke l o
la I n ve
st ow
Raiz ’ t kn
Don
Figure 42. Used Investment Platforms by SEC Breakdown (n=382)

36.1% 35.1% SEC A (>Rp7.5 million)

SEC B (Rp3-7.5 million)
30.3%
SEC C (<Rp3 million)

24.5%
23.1%
21.8%
20.8%
18.2% 18.4%
15.0% 16.3% 16.8%
12.1%
11.9% 10.2% 12.9% 10.2% 12.1%
9.9% 10.2%9.4%
7.5% 8.8% 8.2%
6.1% 6.4% 6.4% 5.9%
5.0%
3.0% 3.0%
3.0% 3.0%
0.0% 0.0% 0.0%

Bibit st er r
Ajaib Barek
sa E-mas Invise
e
Kelola Pluan
g
Ra iz Inve St o c k
bit duit X sav mie
am pre
Tan Indo
35.1% of people ever used Bibit as an investment platform. Then followed by E-mas and Bareksa
with a percentage of more than 20%. According to the SEC group, Bibit users are people with SEC
A and Pluang users are people with SEC C.

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 Figure 43. The Most Used Media to See the Ads of Investment (n=49)

Social media 89.8%

Articles on the internet 53.1%

TV 36.7%

From mouth to mouth 18.4%

Billboards/Banners 14.3%

Newspapers/Magazines/Tabloids 14.3%

Broadcast messages in online chat app 10.2%

Exhibition 8.2%

Brochures/Pamphlets 8.2%

Radio 8.2%

Others 4.1%

According to people who mostly seen the ads of investment, almost 90% of people have seen ads
of investment via social media. Then through articles on the internet (53.1%) and TV (36.7%).

5. Payday Loan
Figure 44. Total Awareness & TOM Payday Loan (n=224)

89.3%
Top of Mind Awareness Total Awareness

61.2%

58.5%
47.8%

37.5% 37.1%
35.7% 34.4%
27.7%
23.7%
13.8%

0.0% 1.8% 0.9% 0.9% 0.9%

0.0% 0.0% 0.4% 0.0%
upiah o
Akula
ku
Tun aiKita R Teman KTA Kilat Julo
Uangm
e Kreditpr Mauca
sh
Rupia
hOne
Dana Uang

Almost 90% of users mostly aware with Akulaku, also has popular third-party paylater product, as
a payday loan platform, then followed by TunaiKita and Dana Rupiah.

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 Figure 45. Used Payday Loan Platforms (n=223)

48.4%

38.1%
23.3%
18.4%
15.2% 13.9% 13.5% 12.6% 10.3% 9.9% 9.9% 9.4% 9.4%

ro n ne
ku upiah t gme Kreditp Uang Tema Julo Ukuin
do
iah O cash Cicil ow
Akula Dana R TunaiKita KTA Kilaan.com) Uan Rup Mau ’ t kn
na a Don
(Pend

Figure 46. Used Payday Loan Platforms by Gender Group Breakdown (n=223)

55.0%
Male Female

39.1%

28.2%
19.1%
19.1% 15.3% 16.3% 17.4%
15.3% 15.3%
10.7% 12.2%
8.7% 9.8% 10.9% 12.2% 12.0% 11.5%
9.9% 8.7%
7.6% 7.6% 6.5% 7.6%

pro piah One e do piah a

i Kit Maucas
h
Akula
ku Cicil Julo man TA Kilat m) Kredit Ru Uangm Ukuin a Ru
UangT
e
K naan.c
o Dan Tuna
a
(Pend

Akulaku, Dana Rupiah, and TunaiKita are the top 3 payday loan platforms that are ever used by fin-
tech users. Among the gender groups, all payday loan platforms dominated by male users.

Figure 47. The Most Used Media to See the Ads of Payday Loan (n=41)

Social media 85.4%

Articles on the internet 58.5%

Broadcast messages in online chat app 39.0%

TV 29.3%

From mouth to mouth 24.4%

Billboards/Banners 17.1%

Newspapers/Magazines/Tabloids 14.6%

Radio 14.6%

Brochures/Pamphlets 9.8%

Exhibition 7.3%

Others 2.4%

Besides via social media and articles on the internet, people also have seen ads of a payday loan
product through broadcast messages in the online chat app, based on the people who mostly seen
ads of payday loan.

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 6. Working Capital Loan
Figure 48. Total Awareness & TOM Working Capital Loan (n=310)

55.8% Top of Mind Awareness Total Awareness

44.2% 41.6%
40.3%
31.3%
28.7% 28.7%
22.9% 22.6% 21.6%
12.3%
4.2%
2.9% 1.0% 1.0%
0.6% 0.6% 0.0% 0.0% 0.0%
lku o r ks t ra n Tunai
Moda Koinw Invest
ree lRakya Cekaja o Aksele Awan M e ka r
.id Taralite
Moda Krediv

More than 50% of users aware of Modalku as a working capital loan, and Investree got the third rank
of awareness, with a percentage of 41.6%. Besides that, Kredivo becomes top of mind because it
also has popular third-party paylater product.

Figure 49. Used Working Capital Loan Platforms (n=291)

49.1%

21.6% 21.0%
18.9%
16.2% 13.1% 9.6%
10.3% 9.3%
7.2%

lku o r ks ree lRakya

t Tunai M e ka r
.id e ’t k n ow
Moda Koinw Invest Moda Cekaja Aksele
ra n Awan Taralit Don

Figure 50. Used Working Capital Loan Platforms by SEC Group Breakdown (n=291)

29.4% SEC A (>Rp7.5 million)

SEC B (Rp3-7.5 million)
SEC C (<Rp3 million)
21.7% 22.6% 22.0%
21.4% 20.0%
17.6%
5.9%
16.5% 16.5%
11.3% 11.3%
11.3% 11.8% 12.2% 9.4%
10.7% 17.0%
8.2% 8.7%
5.9% 5.9% 6.9%

0.0% 0.0% 0.0% 0.0%

Aksele
ra n
Cekaja Invest
ree o r ks M e ka r
.id
Moda
lku
lRakya
t Taralit
e Tunai
Koinw Moda Awan

The top 3 working capital loan platforms used by people are Modalku (21.6%), Koinworks (21.0%),
and Investree (18.9%). By comparing the SEC group, Modalku used people with SEC C, while Inves-
tree used SEC A.

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 Figure 51. The Most Used Media to See the Ads of Working Capital Loan (n=40)

Social Media 85.0%

Articles on the internet 52.5%

TV 32.5%

From mouth to mouth 15.0%

Billboards/Banners 12.5%

Broadcast messages in online chat app 7.5%

Brochures/Pamphlets 5.0%

Newspapers/Magazines/Tabloids 5.0%

Exhibition 2.5%

Based on people who mostly seen ads for working capital loans, social media is the media that most
people choose when they see a working capital loan advertisement. Only 7.5% of people have seen
the ads from broadcast messages in the online chat app.

7. Paylater

Figure 52. Total Awareness & TOM Paylater (n=496)

Top of Mind Awareness Total Awareness

88.9%
82.1%

72.0%

54.2%

43.3%
36.9%

24.8%

15.9% 18.1%

5.6%5.6%
4.4% 4.4%
0.4% 5.0% 0.0% 1.4% 1.4% 0.6%0.6%

ja
Shope
e Gojek OVO e dia
Travelo
ka
Pegip
eg i
Krediv
o Akula
ku DANA Link A
Tokop

The awareness has put ShopeePayLater to first place among apps that provide paylater features.
Then followed by Gojek and OVO.

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 Figure 53. Used Paylater Platforms (n=495)

54.3%
50.5%

28.9%

18.0% 19.0%
11.3% 5.5%

e OVO e dia ka eg i k n ow
Shope Gojek Tokop Travelo Pegip Don’t

Figure 54 Used Paylater Platforms by SEC Group Breakdown (n=495)

57.0%
53.3%
51.3% 50.0%
48.2%
40.6%

31.6%
27.4%
25.0%
20.2%
17.4% 16.1%
9.4% 8.9%
6.2% 5.2%
3.1% 3.1%

Gojek OVO Pegipegi Shopee Tokopedia Traveloka

SEC A (>Rp7.5 million)

SEC B (Rp3-7.5 million)
SEC C (<Rp3 million)

ShopeePayLater dominated paylater used by people (54.3%). Meanwhile, only 11.3% ever used Trav-
eloka Paylater. Based on the SEC group, there is a different preference for using the paylater platform,
e.g., Gojek Paylater & ShopeePayLater mostly used by SEC B, then OVO Paylater used by SEC A.

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Figure 55. Frequency Used Paylater Platforms (n=401)

Everyday
Gojek 14.4% 4-6 times/month
18.4%
22.4%
2-3 times/month
22.8% 1 time/month
6.4% 2-3 times/3 months
15.6% 1 time/3 months

OVO 18.2%
17.5%
23.1%
17.5%
8.4%
15.4%

Pegipegi 18.5%
11.1%
22.2%
29.6%
11.1%
7.4%

Shopee 13.0%
19.7%
26.4%
17.8%
8.6%
14.5%

Tokopedia 24.7%
15.7%
19.1%
21.3%
10.1%
9.0%

Traveloka 12.5%
5.4%
23.2%
7.1%
23.2%
28.6%

According to the frequency of paylater usage, Pegipegi paylater users usually used it for 1 time/month,
while ShopeePayLater used 2-3 times/month.

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 Figure 56. Consideration Factors Mostly Using Paylater (n=102)

Suitable to people needs 66.7%

Saving time 58.8%

Alternative of financial services 56.9%

Trusted Products 55.9%

Easy to be used 46.1%

Functional 44.1%

Detail information of products 44.1%

Complete product’s option 30.4%

Popular product 21.6%

People recommendations 15.7%

Others 2.9%

More than 60% of people consider to mostly use paylater because it is suitable for people’s needs.
Besides that, it also saves time and paylater is also an alternative of financial services.

Figure 57. The Most Used Media to See Ads of Paylater (n=103)

Social media 89.3%

TV 54.4%

Articles on the internet 44.7%

From mouth to mouth 22.3%

Billboards/Banners 22.3%

Newspapers/Magazines/Tabloids 17.5%

Broadcast messages in online chat app 14.6%

Brochures/Pamphlets 12.6%

Radio 11.7%

Exhibition 8.7%

According to people who mostly seen paylater ads, almost 90% of people see paylater ads via social
media, followed by TV and articles on the internet.

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 8. Remittance
Figure 58. Total Awareness & TOM Remittance (n=70)

78.6% Top of Mind Awareness Total Awareness

70.0%
65.7%

50.0%
47.1%
42.9% 42.9% 41.4%

31.4%

10.0%

2.9% 2.9%
0.0% 1.4% 1.4%1.4%
0.0% 0.0% 0.0% 0.0%

Union rue Money z mit Zendmoney .id do o.id OY!

Doku
Weste
rn T Transf
e
Top R
e VIP.co Dolarin GMC.c

Doku gets the highest percentage of awareness of remittance startups (78.6%), then Top Remit gets
fifth place with a percentage of 47.1%.

Figure 59. Used Remittance Platforms (n=68)

51.5%
44.1% 42.6%
33.8%
32.4%
29.4% 29.4%
27.9% 27.9% 25.0%

o n ey rn Union .id z o n ey mit n ow

Doku True M Weste VIP.co Tranfe Ze n d m Top R
e
GMC.c
o.id
Dolarin
do Don’t k

Figure 60. Used Remittance Platforms by Gender Platforms (n=68)

58.1% Male Female

46.5% 48.8%
40.0%
40.0% 37.2%
32.6% 30.2% 32.6% 36.0% 30.2%
30.2% 32.0%
28.0% 28.0%
24.0% 24.0%
20.0%

Doku do o.id mit o n ey .id Union o n ey

Dolarin GMC.c Top R
e True M VIP.co Weste
rn
Ze n d m Transf
e z

The usage of Doku as a remittance platform has reached more than 50%, then following by True
Money and Western Union. VIP.co.id users mostly used by females, while other remittance platforms
dominated by male users.

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9. Consumer Loans
Figure 61. Total Awareness & TOM Consumer Loan (n=202)
Top of Mind Awareness Total Awareness
88.6% 85.6%
78.2%

25.7% 24.8% 21.3%

9.9%
0.0% 0.5% 0.5% 0.5% 0.5%

Kredivo Akulaku HomeCredit Kreditgogo Kreditplus Carmudi

The top 3 consumer loan platforms that aware by users are Kredivo (88.6%), Akulaku (85.6%), and
HomeCredit (78.2%).

Figure 62. Used Consumer Loan Platforms (n=200)

44.0% 42.0%
34.5%

29.0%

10.0%

Kredivo Akulaku HomeCredit Kreditgogo Don’t know

Figure 63. Used Consumer Loan Platforms by SEC Group Breakdown (n=200)

49.4% 48.0%
41.2% SEC A (>Rp7.5 million)
36.0% SEC B (Rp3-7.5 million)
33.3% 33.7%
SEC C (<Rp3 million)
26.5%
22.2%

12.4%
11.1%
8.8%

0.0%

Kredivo Akulaku HomeCredit Kreditgogo

Kredivo leads the usage of a consumer loan platform which accounts for 44.9%. Meanwhile, Kreditgo-
go only reached 10.0%. Among SEC group breakdown, Akulaku users are people with SEC B, while
others used by people with SEC A.

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 b. Challenges
Figure 64. Consideration Factors Not Using Fintech Products (n=77)

Not suitable to market needs 63.6%

No recommendation from others 32.5%

Unpopular products 20.8%

Incomplete product’s information 18.2%

Untrusted product 16.9%

Unpotential advantages 15.6%

Not easy to understand the products 14.3%

Religious issues 11.7%

Less product’s variant 10.4%

Unimpressive products 7.8%

Others 2.6%

According to people who have not yet used fintech products said, it is not suitable for market needs
(63.6%) is the main factor. Then followed by there is no recommendation from others (32.5%).

c. Expectation
Figure 65. Things to Attract Non-Fintech Users (n=77)

Attractive promotions 63.6%

Guaranteed security of personal data 55.8%

Clear and informative product’s information 46.8%

Provide suitable products 46.8%

Provides products that are easy to use 40.3%

Availability of promotions 32.5%

Provide varied products 29.9%

Provide interesting products 27.3%

Provide unique products 24.7%

Popular brand ambassador 14.3%

Others 1.3%

To attract people who have not yet used a fintech product, they expect besides there is attractive pro-
mos and the guaranteed security of personal data. While less than 15% concerned with popular brand
ambassadors of fintech products.

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 d. Future Intention
Figure 66. Fintech Product that Consider to Use In The Future (n=684)
Digital Wallet 38.7%

Investment 20.2%

Paylater 18.4%

Working Capital Loan 7.5%

Insurtech 5.3%

Payday Loan 3.4%

Equity Crowdfunding 1.8%

Consumer Loan 1.3%

Remittance 0.3%

Don’t know 3.2%

In terms of intention to use fintech products next year, Digital Wallet lead the rank with a percentage of
38.7%. Then followed by investment (20.2%) and paylater (18.4%). Based on the SEC group there is
a different future intention, for paylater intention dominated with people with SEC A, while investment
dominated by SEC C.

Figure 67. Fintech Products Will be Used by SEC Group Breakdown (n=684)

SEC A (>Rp7.5 million)

SEC B (Rp3-7.5 million)
39.7% SEC C (<Rp3 million)
38.5% 38.7%

23.8% 22.2%
21.5%
17.5%
17.2% 16.2%

9.7%
5.4% 5.2% 4.8% 5.0%
4.8% 2.9% 3.2%
2.5% 4.2% 3.2% 2.5% 3.7% 3.2%
2.5%
0.5% 0.8%
0.8% 0.0% 0.0% 0.0%

ech Digita
l ment Payda
y
Workin
g
er Remittance Consumer
Insur t Equity Invest Paylat n ow
- a ll e t a n it a l nt K
Crowd W Lo Cap loa n D o
in g Loan
fund

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Figure 68. Desire Level to recommend The Most Used Fintech Products (n=584)

9.50 8.83 8.65 8.57 8.37 7.80 7.29 7.00 6.46

Equity Crowdfunding
Consumer Loan
Digital Wallet
Investment
Paylater
Insurtech
Working Capital Loan
Remittance
Payday Loan

Based on a scale of 1-10, it can be concluded that a digital wallet gets the third place of the highest
rate desire level to recommend to other people (8.65), while payday loan only gets 6.46.

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CIMB Niaga API
Connect your business
and grow with us
Your business future is in your hand

Direct Debit Bill Digital Account

(Octo Cash) Payment Opening

Info lebih lengkap kunjungi website CIMB Niaga API

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05. Strategic
Collaboration

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Strategic
Collaboration
The growth of fintech in Indonesia cannot be separated from synergy and collaboration between stake-
holders. In the local ecosystem, apart from platform developers, regulators, and financial institutions
have a crucial role. Regulators harmonize the relationship between businesses and consumers with the
policies released. It also provides various boundaries so that competition can be maintained. Meanwhile,
financial institutions, such as banks, also play a major role in facilitating fintech with various services,
such as presenting an API for integrated payments and providing institutional loans.

Regulation Update from OJK

This year, OJK has yet to release new regulations for the fintech ecosystem in Indonesia. If we look at the
impact, the regulations on fintech lending released since 2016 are the most significant. A total of 152
players were successfully registered as P2P lenders under the supervision of the OJK. Market accep-
tance, evidenced by the increase in the number and value of loans, also serves to legitimize the urgency
of the policy.

The regulation update plan has begun to be socialized by the authorities, which will be inaugurated in
2021. From the draft released, several points deserve to be highlighted:

• Status simplification. There will only be a licensed status at the OJK. Previously P2P lending
companies had registered and licensed status.

• Increase authorized capital. Previously, the P2P lending provider had enough paid-up capital
of at least Rp2.5 billion. The new regulation will increase to Rp15 billion.

• Equity provisions. There will be an equity requirement of 0.5% of the total outstanding or at
least Rp10 billion.

• Tighter selection. Each player who registers must pass a fit & proper test by the management
and Controlling Shareholders (Pemegang Saham Pengendali - PSP).

• OJK will also encourage P2P lending to provide loans to productive sectors outside Java.

• Sharia elements are also strengthened. Previously, there was no strong rule in P2P lending.

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 OJK adopted this new policy to sort and maximize the P2P lending industry so that it can provide the
maximum economic contribution. In fact, according to OJK, from all platforms, only the top 10 players
contributed up to 61.68% of the industry’s outstanding share. While waiting for regulatory refinement,
the authorities have also implemented a moratorium on new P2P lending registrations this year19.

The requirements that tend to be tighter are also expected to encourage consolidation between players,
both fellow fintech and with conventional financial institutions. For example, when they want to reach
consumers outside Java, they can work with a rural bank or multi-finance companies in the areas; they
are more aware of credit risk related to the characteristics of the surrounding community.

“
“We realize that the maturity of information technology in Indonesia is very fast, the existing regula-
tions must also be updated to bridge this development, especially in p2p lending. We have compiled
these regulatory reforms with the main principle of emphasizing increased consumer protection,”

OJK’s representative.

Regulatory reform from a consumer perspective:

1. Transparency of the number of transactions, users, TKB90, and administrators on the
website and application.
2. Risk mitigation is clearly regulated, including risk mitigation for funders through
insurance/underwriting.
3. Clear protection of personal data.
4. The level of funding quality must be maintained by the operator.

Last year the OJK released circular No. 21/2019 to accommodate fintech innovations (outside of lending).
It regulates digital financial innovation (Inovasi Keuangan Digital - IKD) and regulatory sandbox. The
regulatory sandbox is a testing mechanism conducted by the OJK to assess the reliability of business
processes, business models, financial instruments, and governance. Meanwhile, IKD is an activity of up-
dating business processes, business models, and financial instruments that provide new added value in
the financial services sector by involving the digital ecosystem.

This regulation continues to be intensified, in June 2020 the OJK through the Digital Financial Innova-
tion Group (Grup Inovasi Keuangan Digital - GIKD) has determined that 86 IKD operators are registered
with the OJK20. So far, the regulation has succeeded in embracing digital financial innovation in various
clusters, including: aggregator (36 players), blockchain (1), claim service handling (1), credit scoring (13),
e-KYC (4), financial planner (7), financing agent (7), funding agent (1), insurance broker marketplace (1),
insurtech (2), online distress solution (1), project financing (5), property investment management (2),
regtech (1), tax & accounting (3), and non-CDD verification (4).

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BI Drives Open API Standard
For fintech, BI regulations accommodate payment services and systems. This year no new rules have
been released. However, some initiatives will be intensified, which will encourage consolidation between
players in the financial industry. The realization is by encouraging the industry to develop the direction
of open banking development within the framework of the payment system in Indonesia through the
involvement of the preparation of Open API Standards and the interlink between banks and fintech21.

The Open API standard enables banks and fintech to disclose financial data and information related to
payment transactions from their customers on a reciprocal basis (the principle of equality). It is based
on contractual collaboration openly using API technology. This standard is included in the five principal
initiatives of the central bank in the blueprint for the Indonesian payment system until 2025. At present,
the stage is being refined by BI.

Figure 69. Open API Standard plan by Bank Indonesia/BI

1 2
The Open Banking Initiative acts
Objectives Guiding Principles
as strategic solution to drive 1. Improving efficiency in transactions 1. Openness 6. Customer
digital transformations. Banks and payment systems 2. Interoperability Protection &
are endured to take end-to-end 2. Increasing innovation and competition 3. Independence Consent
digital transformation. 3. Improving financial inclusion 4. Flexibility 7. Novelty
4. Reducing the risk of shadow banking 5. Governance
The Open Banking initiative will
commence through standardizing 4
Open API which comprises data, 3 OPEN API
Standard Implementations
technical, security, and STANDARD
governance standardizations. Data
1. Business model (transfer &
• All data can be opened with
Payment)
customer consent
2. Participant (PJSP)
• Scope/type of data: transfers & payment
3. Time frame implementation
Policy Context • Standard data content

Foster national digital economy and
finance by interlink between fintech
and banks to increase efficiency of
payment system and to encourage
financial inclusion, MSMe.
Technical 5
• Communication/connection protocol: Regulatory Approach
HTTPS
• Architecture type: REST
• Data format: JSON
1. Mandatory to comply for PJSP
2. Rule based on Open API stan-
dards and governance minimum
Security
requirements for data, technical,
• Customer authentication: according to
security, and governance stan-
bank/fintech design (e.g:2FA)
dards.
• PJSP & third party website auth
• Authorization: OAuth.2.0
• Encryption: SHA-2/AES-256

Governance
• Standard governing body
• Standardzation of contracts
• Consumer protection-consumer consent
& Dispute resolution

According to BI, from a business aspect, Open API will increase efficiency in transaction and payment
systems. It can increase innovation and competition, financial inclusion, and mitigate risks22. In fact, on
the banking side, many have released APIs that can be used by digital players. Among them are Bank
CIMB Niaga, BCA, Bank Mandiri, BRI, Bank Danamon, Bank Permata, Jenius, Digibank, and many more.

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“ “To provide API services to startups, fintechs, or anyone who wants
to work together, CIMB Niaga has provided an integrated portal. Us-
ers can log in and perform tests in our sandbox. All processes have
been made seamless through the portal, they can even do business
with us. Of course, if there is a transactional relationship, there must
be formal documentation and a formal procedure that must be mu-
tually agreed upon. We understand that the solutions needed by
partners always need customization. For that, we try to always be
accommodating by prioritizing regulatory and security aspects.”

Anton Hermawan, EVP, Head of Digital Business

Development CIMB Niaga

Institutional Lender Becomes a New Popular

Initially, P2P lending was designed to help people to lend and borrow funds for multiple purposes. How-
ever, the technology-based loan business model is increasingly broad in scope. Not only for consumers
and SMEs, but several specific mechanisms are also starting to be implemented. For example, there are
players in supply chain financing, in-service financing, e-commerce financing, education financing, etc.

To accommodate the increasing loan value, the platform opens opportunities for institutions to become
lenders. In the OJK regulation on P2P lending, the subject lender is defined as a person and a business
entity. These institutional lenders also come from local and foreign companies.

Figure 70. Fintech Lending Process Map/DSResearch

Lender Borrower

Personal/ Personal/
Retail Consumer
eKYC
Verification
Credit Scoring
Instituition Administration
(Bank Enterprise, Transaction SME
Venture Capital, P2P
etc.) Lending

Collection
Transaction
Credit Checking/
Quality Interest

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 Several fintech companies have made strategic partnerships with institutional lenders. Here are some
of them:

Fintech Institutional Lender

KoinWorks Bank CIMB Niaga, Sampoerna

UangTeman Bank Sahabat Sampoerna

Modal Rakyat BRI, BRI Agro

Investree Accial Capital, BRI, BRI Agro, BRI Syariah,

Bank Danamon, Bank Mandiri, GMO Payment
Gateway, Pegadaian
Akseleran BCA, Bank Mandiri, Pegadaian

AwanTunai Accial Capital

Modalku Triodos Investment Management

Kredivo Bank Permata

Based on survey data, out of a total of 146 fintech companies, as many as 36.4% of fintech lending com-
panies only have 1 institutional lender. Fintech lending which has 2-5 institutional lenders are 33.6%.
Only 9.1% of companies have 5-10 institutional lenders. The last category, fintech with more than 10
institutions are only 3.5%.

Figure 71. Number of Institutional Lenders

1 institution 36.4%
2-5 Institution 33.6%
5-10 Institution 9.1%
10+ Institution 3.5%

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Bibliography
[1] Google, Temasek, Bain & Company. 2020. e-Conomy SEA 2020.

[2] Asosiasi Penyelenggara Jasa Internet Indonesia. 2019. Survei Pengguna Internet Indonesia.

[3] CBInsight. 2019. Fintech Infrastructure Market Map: Is Financial Services Having Its AWS Moment.

[4] Otoritas Jasa Keuangan. 2020. Statistik Fintech Lending Periode September 2020.

[5] Katadata. 2020. Literasi Keuangan Digital Rendah, Jokowi Minta Fintech Perluas Peran.

[6] DSResearch. 2020. Evolving Landscape of Fintech Lending in Indonesia 2020.

[7] iPrice. 2020. E-Wallet Lokal Masih Mendominasi Q2 2019-2020.

[8] DailySocial. 2020. Survei MarkPlus: ShopeePay Ungguli Pangsa Pasar Dompet Digital
Selama Pandemi.

[9] Statista. 2020. Top 10 e-commerce sites in Indonesia as of 2nd quarter 2020, by monthly traffic.

[10] Bank Indonesia. 2020. Informasi Perizinan Penyelenggara dan Pendukung Jasa Sistem Pembayaran.

[11] DailySocial. 2020. Survei DailySocial dan Populix: Investasi Reksa Dana Terpopuler di Indonesia.

[12] DSResearch. 2020. Insurtech Strategic Innovation Report 2020.

[13] Bisnis.com. 2020. Penetrasi Asuransi Jiwa Digerogoti Corona, Turun Jadi 1,1 Persen.

[14] DailySocial. 2020. Bisnis Fintech di Paruh Pertama 2020.

[15] Alite Group. 2016. Cross-Border Remittances: Business-to-Business Solutions.

[16] Bank Indonesia. 2018. Jumlah Tenaga Kerja Indonesia Menurut Negara Penempatan.

[17] BPS. 2020. Survei Dampak COVID-19 terhadap Pelaku Usaha.

[18] Katadata. 2020. Kategori Produk yang Dibeli Secara Online 3 Bulan Terakhir.

[19] CNBC Indonesia. 2020. Pengumuman, OJK Setop Pendaftaran Fintech Pinjol Baru.

[20] Otoritas Jasa Keuangan. 2020. Penyelenggara IKD dengan Status Tercatat di OJK per Juni 2020.

[21] Bank Indonesia. 2020. BI Dorong Peran Industri dalam Mengembangkan Open Banking di Indonesia.

[22] DailySocial. 2020. Bank Indonesia Segera Rilis Standar Open API, Permudah Kolaborasi
Bank dan Fintech.

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