Summary of the Development of Indonesia's Fintech Landscape Throughout 2017

Fintech remains the prima donna sector this year. In the news DailySocial, there were 91 investments announced, with details of 32 startups receiving early-stage investments (seeds), 29 startups get series A, and 9 startups get series B. The startup sector that receives the most investment is fintech as many as 29 startups, 14 startups E-commerce, and 9 media startups, the rest are other sectors.

Because it is a prima donna, the movement of issues around fintech is also very dynamic, making understanding of innovation behind regulation often occurs. Inevitably, the two authorities in charge of this sector, such as Bank Indonesia and the Financial Services Authority, have made many moves to oversee the development of fintech by launching new policies.

Plus, at least a week there is always news about fintech whether it's about launching new fintech startups, adding features, business collaborations, company acquisitions, and some even going out of business.

DailySocial compiles a summary of interesting news about fintech that happened this year. Here's what he wrote:

Regulation

Although technology runs very dynamically, there is always a legal umbrella over it. Throughout this year BI is still busy with regulations regarding the payment system, while FSA still focused on making derivative rules from POJK No. 77/2016 concerning p2p loans.

BI is getting stricter in licensing electronic money licenses, because now applications are not only from financial-based companies, but can be from non-financial companies such as e-commerce services. This happened to BukaDompet (Bukalapak), Tokopedia (TokoCash), ShopeePay (Shopee), and PayTren which until this news was revealed had not received approval from the central bank since September 2017.

GrabPay (Grab) was also suspended, until finally while waiting for the permit to be issued, they used the license OVO already had to cooperate (December 2017).

Not only the issue of licensing licenses, BI also issued a new policy that all fintech players who play in the realm of the payment system must now be registered with BI. There are at least four criteria for types of businesses that are required to register, namely electronic money, payment instruments using cards (ATM, debit and credit cards), fund transfer providers, and payment transaction processing operators (in which there are payment gateway, e-wallet and organizer switching).

Regarding bitcoin, BI is getting more mature forbid it to be used as a transaction tool in Indonesia. Of course, this prohibition does not yet apply to people who use bitcoin as an investment product. However, BI does not want to take all the risks if a problem occurs.

Even though it seems to prohibit bitcoin, BI admits that it is not completely anti-bitcoin technology which is the basis for its operation cryptocurrency. BI is even planning to do a test technology next year (October 2017).

Meanwhile, BI too inaugurate national payment gateway (GPN) (December 2017). This system makes all domestic transactions must berouting domestically, shifting the role of companies switching from abroad such as Visa and Mastercard. GPN is also encouraged to streamline the transaction burden imposed on consumers and business actors.

Business innovation

In terms of business innovation, because more and more players are starting to look at this sector, the competition is getting fiercer. Innovation is increasingly demanded in this regard. Large-scale e-commerce players such as Bukalapak and Tokopedia are competing to present fintech-based products on their platforms.

TokopediaFor example, many have collaborated with fintech players for capital loans, online loans, credit cards and insurance (January 2017). Bukalapak did not want to lose, in the same month, this company presented a breakthrough that could be said to be very interesting because it presented OpenMutual, to encourage users to invest in mutual funds.

It doesn't stop there, Bukalapak also launched a service OpenGold to encourage gold investment. They cooperate with IndoGold as an exclusive partner (June 2017). The presence of BukaEmas has encouraged other players such as Orori to present services similar to e-gold (September 2017), and the sharia-based gold trading application Tamasia also launched (October 2017).

Another business actor, DBS Bank launched an online banking application Digibank which is specifically targeted at millennials as its customers (August 2017). Digibank is almost similar to the banking application created by BTPN (Jenius).

Commonwealth Bank inaugurated the Tyme Digital onboarding banking platform (August 2017) for opening digital accounts and offices as a form of commitment to transforming to digital (October 2017).

Still related to business innovation, Salim Group realize the commitment to build a digital bank by acquiring 55% stake Prime Ina Bank (May 2017). This conglomerate group wants to focus Bank Ina on e-payment services for online businesses.

Still in the banking world, big banks are competing to attract fintech startups, one of which is by establishing venture capital. BCA set up Central Capital Venture by injecting initial capital of Rp200 billion (January 2017), BRI did not want to lose. This state-owned bank acquisition Bahana Artha Ventura (October 2017).

Meanwhile, BNI admitted that it still study whether it wants acquisition or organic so it's likely to be announced next year. Bank Mandiri with Independent CapitalSo far, it has injected into seven fintech startups, including Moka, Amartha, PrivyID, and Cashlez.

Business turmoil

In the midst of the struggle for electronic money licenses, Indosat Ooredoo chose to withdraw from fintech and transfer license My wallet to be transferred to PayPro (April 2017). My wallet is one of the many digital products that Indosat closed one by one until the end fully closed and chose to return to the command as a telecommunications operator (June 2017).

Other operators choose the same step, XL Axiata chooses to sell Elevenia to the Salim Group. Meanwhile, XL Tunai is still operating. Telkomsel slightly different, still running digital products and e-money T-Cash services.

Even now, T-Cash keep showing off until the end Telkomsel chose to separate the T-Cash division into a separate company. And, will choose to be a platform agnostic that can be used outside the user Telkomsel (December 2017).

It's still a matter of e-money license, because the importance of this license makes Emtek Group acquired two e-money companies Doku and Espay (May 2017). While developing the fintech business, Emtek also acquired a portion of Bareksa's shares through shareholders from Doku (April 2017).

In the same month, Emtek also collaborated with Ant Financial to establish a joint venture to work on the DANA product implemented by Alipay in Indonesia. DANA is available exclusively on the BBM messaging platform.

After the drama was suspended GrabPay by BI, Grab I don't even want to stay silent. By utilizing the license that is owned sister companies, OVO, finally GrabPay back to work.

Commitment Grab who want to develop GrabPay, seen by fully acquiring Kudo, this rumor has been circulating since February 2017, until finally it was officially announced in April 2017. Kudo be a vehicle Grab to obtain an electronic money license, because the technology is already there comply with the requirements of BI.

On the other hand, Go-Jek By acquiring MV Commerce, it has successfully stepped out and is 'fun' to develop the functionality of its electronic money by presenting many features in the Go-Jek application. For example, presenting Go-Points (February 2017) and Go-Bills (November 2017).

With Go-Pay, Go-Jek wants to take this service further, outside of its own ecosystem and can be used for everyone. This initiation gives birth three acquisitions Go-Jek for three fintech companies, Midtrans, Kartuku, and Mapan. Despite this acquisition have not received approval from BI, because Go-Jek has not applied for an acquisition permit (December 2017).

Well Grab and Go-Jek are companies that are quite fierce in terms of innovation. With the help of capital from investors and networks from sister companieshim, making both of them move quickly in innovating. In fact, initially the two companies were application-based ride hailing, is now transformed into a company that intersects with the financial world.

In terms of fintech startups, MoneyFriend admits to pivot fully into a company p2p loans after pocketing a registration certificate as a player p2p loans from OJK. This business transfer begins next year (December 2017).

Industrial performance

P2p loans become one of the fintech sectors with the most new players emerging this year. According to OJK data, until August 2017 has distributed Rp1,44 trillion grew 496,51% on a year-to-date (ytd). This figure is the result of the accumulation of 22 companies p2p loans who have pocketed a certificate of registration.

The largest distribution still comes from Java Island with a portion of 83,2% and the rest from outside Java. The total borrowers reached 120.174 borrowers, while the total lenders reached 48.034 lenders.

Based on BI data, the volume of electronic money transactions reached 600,5 million transactions worth Rp8,76 trillion. This figure is obtained from the accumulation of 26 companies that have obtained e-money licenses from BI.

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Also download the report on the development of fintech services in Indonesia in 2017:Click here.