High Domestic Investor Interest: Thanks to Investment Literacy, Fintech Collaboration, and the Pandemic Situation

High Domestic Investor Interest: Thanks to Investment Literacy, Fintech Collaboration, and the Pandemic Situation

Since the outbreak of the Covid-19 pandemic in Indonesia, various industries have experienced great shocks. Economic instability occurs. Moreover, when several regulations implementing social restrictions were implemented, the economic turmoil seemed to stop without enthusiasm. This influence has forced many industries to make adjustments to cope with losses.

However, during the pandemic, it turned out that not all industries experienced a decline. On the other hand, the impact of the pandemic has actually increased the investment industry, which consists of several types of investments, such as stocks, mutual funds, and bonds. This upward trend in the investment industry has actually attracted domestic investors to increase their income amidst the uncertainty during the pandemic.

In fact, based on data from the Indonesian Central Securities Depository (KSEI), the number of investors including stock, mutual funds, and bonds investors in the capital market as of September 30, 2021, has reached 6,43 million investors. That number increased 66% more than at the end of 2020 or a five-fold increase since 2017. This figure was dominated by retail investors whose proportion reached 90% of the total investors.

The increase in domestic retail investors also cannot be separated from the role of financial technology (fintech) companies in helping distribute government securities (SBN) investment products and mutual funds and shares of companies operating on the stock exchange. In general, fintech encourages financial inclusion and financial literacy. Where during the pandemic, most investors receive investment knowledge through various digital platforms.

Responding to the role of fintech in influencing the increase in the number of investors, Moduit's Chief Marketing Officer, Stefanus Adi Utomo said retail investors were encouraged to invest because of the pandemic situation. “In a very limited situation, investors are looking for ways to make safe transactions, choosing to invest in bonds, mutual funds, and even stocks. This choice is because investment literacy has increased in Indonesia," he said.

For example, said Stefanus, the increase in investment literacy is directly proportional to the increase in the number of domestic investors. This is also the case in Moduit. Since the beginning of the pandemic, the average amount of investment funds per customer from Moduit's business to consumer (B2C) channel has increased 4 times to above IDR 70 million per customer. The Professionals who joined as Moduit Advisor Partners themselves experienced a rapid increase of 3,5 times with an average per amount of investment per customer of IDR 950 million.

According to Stefanus, the growth rate that has occurred at Moduit cannot be separated from three main things. First, the influence of investment literacy which is already quite good in Indonesia. Second, fintech companies (Moduit) focus on the needs of today's society. Third, the creation of public trust to take steps to improve themselves that comes from the uncertainty of the pandemic. "Those three factors trigger high investment during the pandemic," he said.

Meanwhile, Chairman of the Financial Planner Association Indonesia (FPAI) Judy Febryano, CFE., said that the increase in the number of investors is a positive sentiment in increasing investment trends in Indonesia. "We believe that investment literacy in Indonesia is increasing, because many people have a portfolio of investment products," he said. According to him, the more people invest, the better the national economic growth will be.

He also assessed that the increase in the number of domestic investors in the domestic capital market showed high confidence in investing. “This growth trend provides investment strength in national companies which are dominated by local investors. This means that dependence on foreigners can decrease, because domestic investors are strong,” he said. That way, he assessed, the development of the national economy during the pandemic has moved positively.

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