Indonesia Financial Group senior research associate Ibrahim Kholilul Rohman said the industry was immature in the sense that digital service providers were competing with each other while simultaneously taking on conventional banks that were setting up digital services of their own.

Consolidation through mergers and acquisitions, he added, would result in big opportunities for the smaller players.

“If these [digital payment providers] are small and numerous, and they just kill each other, they won’t grow to be [serious] contenders,” said Ibrahim, who is also a digital economy lecturer at the University of Indonesia.

“I think, through consolidation of digital platforms, one or two or three players will emerge. They might be small, but they’d be strong; they could go head-to-head against legacy banks,” he added.

Digital wallets, which allow users to conduct various types of payment transactions through their smartphones in ways that are typically more convenient and faster than bank transfers, continued to grow in 2022.

Yet virtual accounts (VAs), a digital payment method from traditional banks still dominate the industry, accounting for more than 30 percent of transaction volume last year.