They come in the form of what is to be called mortgage tech. Their core business revolves around aggregating mortgages with technology to simplify existing processes and help banks filter and assess credit worthiness.

Services provided by mortgage technology players revolve around two big categories, namely brokerage and financing in which everything is conducted digitally. To execute them mortgage tech start-ups also partner with both banks and property developers.

“Efficiency is an ever-growing imperative,” said Doddy Ariefianto, associate head of the finance program at Binus University, on Friday, regarding whether the whole process of mortgage will be entirely digitized in the future.

Doddy stressed that a certain level of due diligence must be kept despite digitalization as part of common prudence practices in the financial sector.

Indonesian Banking Development Institute (LPPI) senior faculty Moch. Amin Nurdin backed Doddy, saying mortgage tech is a “game changer” as digitalization could cut costs significantly.

“When governed, socialized, educated and promoted properly, [mortgage tech] will be big,” said Amin on Friday.

He went on to say that technology is disrupting any sector irrespective of what shape they materialize in. Any attempts to undermine it would be less beneficial to related players in the business, he said, adding incorporating it may be a more suitable option for the mortgage industry.

The need to have efficient mortgage services are immense. More than 74 percent of consumers rely on a mortgage to purchase property in Indonesia, followed by cash installments at 17 percent and the rest is one time cash payment, according to a Bank Indonesia (BI) survey in the third quarter of last year.

Though it has become the main method to purchase property, national mortgage penetration is very low, amounting only 2.93 percent of the gross domestic product (GDP) as of 2021, according to state-owned mortgage lender Bank Tabungan Negara (BTN), which sees it as a large untapped potential in the industry.

Meanwhile, demand for housing will remain high for years to come with the home ownership backlog reaching 12.7 million households in 2021, higher than 11.4 million six years before, according to a study from BTN.

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IDEAL, a Jakarta-based digital mortgage platform, offers its service partnership with big players on both the property and banking side with the former comprising of Sinar Mas Land, Ciputra and the PIK2 Group and the latter comprising of OCBC NISP, CIMB Niaga, Mandiri, Danamon, Permata, Maybank and Panin.

“IDEAL helps users to find out mortgage products information suitable to their needs and it facilitates the process of mortgage application digitally, so the process is easy, fast and safe,” IDEAL Vice President of marketing Arief Satrio told The Jakarta Post on Friday.

IDEAL offers three services, namely a primary mortgage to serve consumers who want to purchase directly from developers, a secondary mortgage to serve purchases from individual owners and a take-over-mortgage to accommodate consumers’ need to transfer an ongoing mortgage to a different bank.

Other services include a simulation to estimate the required budget to take up a mortgage as well as to help provide an analysis if a customer wants to move their mortgage to another bank, among many others.

Another homegrown mortgage tech start-up, Tanaku, said its services were limited to property offered by developers but it had more selection by partnering with over 10 developers.

The start-up is relatively new as it was founded in mid-2022 and claimed to have secured more than US$1 million in its pre-seed funding.

“Tanaku’s mission is to make home ownership accessible for millions of Indonesians and empower them to join the path of home ownership,” said Tanaku head of marketing and brand Bhanu Prakash on Friday.

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Other local mortgage tech start-up firms, Pinhome, offers new, previously owned and auctioned properties that according to its chief marketing officer Fibriyani Elastria are scattered across many cities in Indonesia.

Pinhome currently had 700,000 unique listings and it was in business with more than 20 mortgage financing partners from conventional banks, she said.

To help its customers, the company also provides financial consultants to guide users until the deal is closed to ensure transparency and ease the credit application process.

“Pinhome’s goal is to facilitate Indonesian people to buy their first house, remembering that mortgage penetration in Indonesia is still relatively low compared to other Southeast Asian countries,” said Fibriyani.