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Most fintech start-ups struggle to reach remote Indonesia: Survey
The companies cited low financial literacy and limited infrastructure as some of the pain points.
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Illustration of fintech lending. (JP/Swi Handono)
M
ost Indonesian fintech start-ups struggle to reach remote parts of Indonesia mainly due to low financial literacy in local markets, a survey by consultancy firm Ernst & Young Indonesia shows.
The survey found that 19 percent of fintechs struggle to expand outside Jakarta, 23 percent to expand outside Java and 13 percent to expand into rural areas. The remaining 45 percent reported no issues.
"Greater Jakarta remains the main market segment for players, but 45 percent say they have no problem scaling up and want to push their reach to areas beyond urban centers," EY Indonesia managing partner David Rimbo said in a virtual event held by the Indonesian Fintech Association (Aftech) on Thursday.
According to the survey, low financial literacy is the most commonly cited obstacle to expansion at 55 percent, followed by limited infrastructure at 44 percent, then cultural barriers at 20 percent.
The survey highlights the challenges the fintech industry faces in delivering its promise of financial inclusion for underbanked Indonesians.
EY survey's also highlighted the longstanding problem of limited tech talents. Respondents urged the government to promote science, technology, engineering and mathematics more in schools and universities to address the issue.
Respondents also called on the government to relax industry regulations, make a dedicated fund to support start-ups and fintechs, and improve digital infrastructure to further support expansion to rural areas, among many other suggestions.
