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Fintech: Unstoppable tide?
There are several important factors converging into a perfect storm for fintech disruption in Indonesia.
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Fintech is the latest buzzword and taking the local start-up scene by storm. (Shutterstock/File)
F
intech is the latest buzzword and taking the local start-up scene by storm. According to the Indonesian Fintech Association (IFA), the number of fintech start-ups in the country, defined as young companies that use technology to create new or optimize existing financial services, grew by 78 percent in the short space of two years. At the same time, funding of regional and local fintech startups is at an all-time high.
Is fintech merely a fad like the daily deal phenomenon, or is it an unstoppable tide that will wreak disruptions similar to how traditional businesses in travel, retail and transportation have been swept away in the past couple of years by tech players in those industries?
We believe that fintech is here to stay and that the years to come will usher in new start-ups that will give the incumbent financial service providers a run for their money (pardon the pun). No sector in the financial services industry is immune: Payments, banking, multi-finance, insurance and asset management all have the potential to be disrupted.
There are several important factors converging into a perfect storm for fintech disruption in Indonesia. The first factor is the availability and accessibility of technology and information. Smartphone penetration, currently at 65 million users, is projected to grow by at least 30 percent per year to reach 100 in a couple of years’ time.
This is important, as it — together with the availability of cheap data connections — allows consumers to access online financial services easily and instantly. Equally important is the availability and accessibility of technology for the fintech start-ups themselves.
Through the open-source movement, advanced platforms and technologies are made available for free by various developer communities and software giants for anybody to use, making it cheaper and faster for start-ups to build advanced applications.
As a recent example, Google’s Tensorflow, a machine-learning technology that was used in Google Translate and Android’s speech recognition system, is now available for start-ups to build upon with no payments to Google.
