Fintech Business in the First Half of 2020

Financial technology (fintech) has become a well-developed business landscape in Indonesia to date. Its growth is on both sides, from business and consumer. This is shown by the increasing variety of services fintech in Indonesia, and has a large user base. Every year, DSResearch regularly releasesFintech Report”, an integrated report discussing related industry trends and dynamics.

In a recent report released earlier this year, some interesting data were presented. One of them is related to the distribution of funds by startups p2p loans, last year the value reached IDR 60,4 trillion, an increase of almost 3 times from the previous year. Borrower accounts registered with OJK also rose to 14,3 million, a 3x increase over 2018 which was only 4,3 accounts.

In conclusion, it is observed that there is always an increase in business from year to year, with the most popular sub-businesses related to loans and digital wallets. Unfortunately this year Covid-19 has "disturbed" various business arrangements, and this is no exception fintech, so many business agendas must be readjusted. But has the pandemic really caused a significant disturbance to people? fintech in Indonesia?

This article will try to present review and comparison data, referring to business activities that have taken place during the first half of 2020.

Startup funding

In the midst of business needs to accelerate growth, funding is an important business aspect that continues to be pursued by founder. In the first half of 2020 (H1 2020), there were 8 fundings involving startups fintech operating in Indonesia. Regarding transactions, the amount is down compared to H1 2019, last year there were 12 transactions. However, regarding the nominal (published), the value is much higher in H1 2020.

No funding publication fintech During the first quarter of this year, all new funding was announced starting April 2020. Here's the full list:

If last year most of the funding was in the early stages, this year more funding was disbursed for follow-up funding. Some analysts have predicted that the crisis due to this pandemic will make investors more selective in disbursing their funds. Most have opted to increase their spin in established businesses and gain good traction, also in this Covid-19 period.

Besides, earlier this year Cashlez successfully conducted IPO on the Indonesia Stock Exchange. The company released 250 million new shares at a price of Rp350 per share. This amount of capital covers approximately 17,5 percent of the paid-up and issued capital. Managed to book Rp87,5 billion from the celebration.

P2P lending during the pandemic

The Indonesian Joint Funding Fintech Association (AFPI) in early June 2020 announce the results of his research. Described, during the pandemic period loans were successfully facilitated and approved Actioncalendar reached Rp237 billion from 674 thousand accounts/transactions. The survey was held on 9-14 May 2020 and was participated by 143 organizer platforms p2p loans as a respondent.

From the consumer side, the rate of return is quite stable. A total of 90 platforms stated that TKB90 was stable, 34 platforms decreased TKB90, and 6 platforms claimed that TKB90 had increased. TKB90 is a level of credit quality in a platform. The higher and closer to level 100, the better. Based on OJK data as of March 2020, TKB90 industry p2p loans recorded at the level of 95,78%.

As of April 2020, the accumulation of loan disbursements in the industry p2p loans as much as Rp106,06 trillion, up 186,54% yoy. Java Island dominates total loans of up to Rp90,88 trillion, the remaining Rp15,18 trillion comes from outside Java. Amount Actioncalendar recorded there are 647.993 and borrowers reached 24,77 million.

Product consolidation and innovation

Several new product initiatives continue to be rolled out by players fintech local. Last June, KoinWorks announced that it was starting to seriously work on the investment business. They collaborated with MMI to release a mutual fund feature through its application. Regarding investment, Indodax and Tanamduit are also expanding their wings to accommodate this need, by presenting a digital gold buying and selling feature.

Another collaboration was also established between Dana and YesDok, adding features Telemedicine in the Funds app -- before Gojek-Halodoc and Grab-Ping An has also released a similar service. In the same period, LinkAja launched a sharia feature to work on new market segments. Several business platforms outside fintech also continues to expand its business lines in the financial sector. Presuming to help SME partners in their ecosystem, Moka and eFishery this year inaugurated the capital feature.

In the banking sector, this year also increases its presence to present technology products. Hoping for luck in the digital wallet ecosystem, Bank OCBC NISP is starting to seriously work on ONe Wallet. Jenius also strengthened the features in its application, last May they presented Moneytory to help users do personal financial planning. Meanwhile, Bank Mandiri this year also released a special application to accommodate MSME loans.

Remittance deserves attention

In the first half of 2020, two innovations related to remittances were presented. The first is the presence of Zendmoney who wants to help bridge migrant workers, then the second is the OY! Indonesia, which released a new feature titled remittances. Transaction needs between countries (cross-border) cheap and efficient processes have succeeded in making players in this sub-sector steal the attention of consumers.

DailySocial had a chance to talk with two remittance players, Transfez and Topremit. Transfez said that since the Covid-19 pandemic in March 2020, the number of Transfez users has increased by more than 400%. Likewise for TopRemit, they claim to have successfully processed more than 280 billion Rupiah with 16 thousand users who registered and in the first 6 months of 2020.

Wallex Technologies become a player in local remittance technology that this year received funding. During the pandemic period, they claim an average of about 20% increase in business every month.

BRI Ventures in May 2020 also announced that it was involved in funding Nium, a Singapore-based Remittance startup. Visa participated in this round. Before changing its name, Nium received an injection of funds from MDI Ventures in 2014. At that time, MDI Ventures was still led by Nicko Widjaja, who now leads BRI Ventures. In the first quarter of 2020, Nium has pocketed a transaction value of $2 billion.

The next fintech development

Unfortunately the impact of the pandemic has not ended until now. Even in various cities, PSBB is still being carried out to prevent the transmission of the virus, which of course has an impact on the economy in the local area. Basically startup fintech work to "accommodate" the economic (monetary) process of the community, as simple as: a new digital wallet will be filled if the user has money/income. So that this continuing economic slowdown could also have an adverse impact related to traction.

On the other hand, many opportunities are being pursued by the community. More activities at home, many are starting to try their luck with entrepreneurship – opening food ordering services, crafts or other services. At a time when banks are increasingly selective in applying for credit, p2p loans can be an alternative solution for capital. So the challenge for platforms is increased risk analysis – multiple players credit scoringbegan to emerge to accommodate these needs.

Apart from remittances and popular fintech business models, there are still several business opportunities that have the potential to be developed. Two of them that we think will be something significant are insurtech and equity crowdfunding. Supported by insurance penetration which is still minimal and continues to increase; and the culture of gotong royong typical of Indonesian society.