Indonesia’s booming fintech industry: the right place at the right time?

Disruptive fintech startups are surging in Indonesia thanks to a lack of access to traditional banking and a mobile-first society hungry for new ways to manage their purchases. We round-up the best and the biggest of the firms currently attracting investment. 


Indonesia’s fintech scene is buzzing with action. The total disclosed amount of funding for startups boomed last year, reaching around Rp 486.3 billion (US$ 48.6 million), says the most recent report from Fintech Indonesia and DailySocial.

Rosan Roeslani, the chairman of the Indonesian Chamber of Commerce and Industry (KADIN), is full of optimism about the opportunities for the sector saying, “In 2008, fintech investment stood at roughly US$900 million. It had increased to US$3billion in 2013, and is projected to reach US$8 billion by 2018.”

Company Investment Investors
Kinerja Pay Rp 26 billion (IPO) Public (IPO at US OTC Market)
ETHIS Rp 6.6 billion (Seed) Local: –
Foreigner: Azmi global, Quest Ventures
Limakilo undisclosed (Seed) Local: East Ventures
FinAccel US$1.1M (Seed) Lead: Jungle Ventures
Others: 500 Startups, Alpha JWC Ventures, Amar Goel, Jerry Yeu, Mathieu Harding, Prashant Kirtane
Kredivo Owned by FinAccel
Investree Undisclosed (Series A) Locai: Kejora
Foreigner: –
Moka Rp 25.8 billion (Series A) Local: East Ventures, Convergence Ventures
Foreigner: Wavemaker Partners, Northstar Group
iGrow Undisclosed (Seed) Local: East Ventures
Foreigner: 500 Startups
Eragano Undisclosed (Seed) Local: East Ventures
Foreigner: –
Modalku Rp 100 billion (Series A) Local: Alpha JWC Ventures
Foreigner: Sequoia India, Harvard
EasyPay Rp 201.6 billion (Undisclosed) Local: –
Foreigner: European Funds
Cermati Rp 24.8 billion (Series A) Local: East Venture
Foreigner: Beenos Plaza
KUDO Undisclosed (Undisclosed) Local: EMTEK, East Ventures, Skystar Capital
Foreigner: 500 Startups, Singapore Press Holdings, IMJ Investment Partners
Jojonomic Rp 20 billion (Venture) Local: Maloekoe Ventures, East Ventures
Foreigner: Fenox Venture Capital, Golden Gate Ventures
UangTeman Undisclosed (pre-A) Undisclosed Undisclosed (Series B) Locas: Kejora
Foreigner: Teistra Ventures, JasragInvestments, Altitude Partners, Captii Ventures, Monk’s Hill Ventures
Ponsel Pay Acquired (Undisclosed) Local: Go-Jek
Foreigner: –
MC Payment Rp 66.8 billion (Undisclosed) Local: –
Foreigner: Perle Ventures, tryb Capital, Aura Funds Management, 2W Group
Cicil Undisclosed (Seed) Local: East Ventures
Foreigner: –

Source: Indonesia’s Fintech Report 2016

Fintech is the fastest growing sector for Indonesian startups

To paint a picture of this rapid growth, in 2015 investors put pen to paper on 103 private equity fintech deals totalling US$63.8 million, pushing the industry’s yearly growth rate to 50%. This makes it the fastest growing area for Indonesia’s startups, says PwC’s FinTech APAC Landscape Developments report. Among the 62 companies in the market, 36% were B2C, or C2C e-commerce and 10% were finance-based.

There are a number of factors which make Indonesia the right place for fintech innovation right now. In 2014, banking penetration (as loan-to-GDP ratio) was the lowest among Asia-Pacific countries. In fact, 63.7% of people over the age of 25 – about 150 million – had no bank account at all, and only one in 15 people had credit cards. At the same time, smartphone penetration has been increasing rapidly. This means that the demand for e-money will continue to grow in the absence of services from the formal financial economy.

indofintech-indo phone

indofintech-indo phone

Source: eMarketer & EY

The sale of handsets is fueling fintech growth

The struggle between traditional services and the disruptive fintech economy will likely end with the newer facilities winning the war. The same has happened in China, where Alibaba’s gross merchandise value grew from RMB 319 billion (US$46.3 billion) to RMB 2 trillion (US$291 billion) from 2014 to 2016. In the first quarter of 2013, 8.65% of Taobao transaction volume came from the traditionally service-starved countryside. In Q1 of 2015, it was 9.46%.

As society becomes increasingly mobile-first, the use of handsets for payments has increased from 9% in 2015 to 14% in 2016. As one example, DOKU’s e-money was licensed from Bank Indonesia in 2012 and launched in April 2013. Within four years, it has more than one million customers and over 22,000 participating merchants.

A lack of infrastructure means people cannot access traditional services

Meanwhile, Go-Jek acquired Indonesian e-payment startup MVCommerce which operates the mobile payment service PonselPay. This platform provides mobile channels for banks to reach out to unbanked people and allows customers to transfer money via text. It currently operates Go-Pay as its cashless payment system but will, “introduce a feature that allows customers to top up their Go-Pay credit by paying cash to the Go-Jek drivers”.

The ratio of operating expenses to assets for banks in Indonesia varies from 2.5% to 4%, much higher than that in Malaysia (2%) and Singapore (1%), fuelling low bank penetration. Geographical conditions add to this problem as half of all banks are in Java while Bali, East Nusa Tenggara and West Nusa Tenggara together have only 5% of branches. It is a painful illustration of the way out-of-date banks and financial institutions cannot fulfil the rising demand for services.

As a result, 44% of Indonesians borrow money from friends or family if needed, and just 13% would use a formal financial institution. This creates space for solutions such as Kredivo, which allows consumers to make payments on e-commerce websites and pay for goods by instalments. It offers an interest rate of just 2.95% per month and had facilitated 60,000 transactions by November 2016. Mobile phones are the most common purchases, and the Krevido’s transaction and loan value are growing by 20% per month. By comparison, Bank Indonesia expects total loan growth of just 7% to 9% this year.

Exciting fintech performers in Indonesia in 2017

  1. Kinerja Pay

KinerjaPay provides digital payment solutions to bricks-and-mortar businesses in Indonesia and Southeast Asia. Their other services include online utility bill payment, mobile phone top-ups and data purchases, insurance and automobile instalments.

Investment: An initial public offering to the US over-the-counter (OTC) market in 2016.

Users: Reportedly more than 60,000.

  1. FinAccel

FinAccel is a Singapore-based credit risk and consumer lending startup. It owns Kredivo which gives e-commerce shoppers instant credit financing based on real-time decisions.

Investment: US$1.1million seed money from Jungle Ventures and an undisclosed amount from another eight investors in 2016.

Users: Reportedly around 100,000.

  1. KUDO

KUDO is an e-commerce platform where people pay by cash when they shop.

Investment: An undisclosed amount from five investors over two rounds.

Users: Reportedly around 150,000 agents across Indonesia by September 2016 and a target of one million by 2018.

  1. Investree

Investree is an Indonesian peer-to-peer lending marketplace.

Investment: An undisclosed amount in a Series A round in 2016.

Users: Undisclosed but reported to have successfully lent Rp 23.5 billion (US$ 2.4million) with 0% bad loans so far.

  1. Jojonomic

Jojonomic is a mobile, cloud-based software solution for employee expense reimbursement founded in 2015.

Investment: US$1.5million in a Series A round in 2016. The lead investor was Maloekoe Ventures.

Users: Reported to have thousands of users.

  1. CekAja

CekAja helps users compare and apply for financial products.

Investment: Raised an undisclosed amount in a Series B round in 2016. The investors included Kejora and Monk’s Hill Ventures.

Users: Unknown

  1. Ponsel Pay

Ponsel Pay is an SMS-based e-payment service provider.

Investment: Acquired by Go-Jek for an unknown amount.

Users: Unknown

  1. Modalku

Modalku is the first peer-to-peer lending platform in Indonesia.

Investment: Rp 100 billion (US$10 million) from a Series A round in 2016. The investors included Alpha JWC Ventures, Sequoia India and Harvard.

Users: Reported to have given US$750,000 in loans to over 30 small and medium enterprises as of August 2016.

  1. Moka

Moka focuses on building mobile point-of-sale (mPOS) for restaurants and retail.

Investment: US$1.9 million from East Ventures and other three investors from a Series A round in 2016.

Users: Reported to have signed up 1,000 stores as paying customers in 2015.

All information compiled from Crunchbase, Indonesia’s Fintech Report 2016 and the company’s web pages.