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Fintech partnerships enable banks to unlock technological capabilities at lower costs
Many banks have signed partnership deals or bought into nimble start-ups as an alternative to building costly technology projects
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People get information about services from online lending company KoinWorks in Jakarta. Many banks have cooperated with financial technology (fintech) companies to boost their financial services (The Jakarta Post/Dhoni Setiawan)
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nstead of competing against each other, banks and financial technology (fintech) companies are joining hands and combining their resources to tap into the country’s growing financial services market.
In an effort to stay up-to-date with recent technology and stay relevant amid the latest changes in financial services, many banks have signed partnership deals or bought into nimble start-ups as an alternative to building costly technology projects.
For the banks, the logic behind a partnership with fintech companies is simple: It gives them the opportunity to reach a wider customer base, unlock their technological capabilities without having to buy one of their own and penetrate the country’s unbanked population — all without having to spend too much money.
“We are partnering with 12 fintech companies from peer-to-peer [P2P] lending and payment apps to SME [small, middle, enterprise] solution to enhance our innovation by sharing technologies, as well as to boost financial inclusion,” Mandiri Capital Indonesia (MCI) chief financial officer Hira Laksamana told The Jakarta Post in a recent interview.
MCI operates as the innovation arm of state-owned lender Bank Mandiri. It has received around Rp 1.5 trillion (US$107 million) and licenses from the bank to invest in fintech companies since 2016. However, Hira declined to reveal MCI’s total investment so far for buying shares or channeling funds.
Among MCI’s portfolios are P2P lending platforms Amartha, Koinworks and Investree, as well as payment app LinkAja and electronic signature service PrivyID.
As banks are heavily regulated and supervised by the Financial Services Authority (OJK), the prospect of teaming up with fintech companies offers them the chance to experiment with new products.
