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Navigating the waves of Indonesia’s financial trends
The future of finance in Indonesia is looking bright as the government and financial authorities continue to innovate in the name of sustainable finance.
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A merchant displays a sign bearing its QRIS code for facilitating all forms of cashless payment, as seen in Jakarta on April 20, 2022. (Shutterstock.com/wisely)
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ndonesia’s financial services landscape is evolving rapidly, with technological advances and regional integration driving the development of innovative new products and service that could unpack the opportunities and challenges for businesses operating in these markets.
There is indeed no one-size-fits-all answer to what the future of finance in Indonesia will look like. However, we can expect four key trends and developments to watch for. Understanding them is essential for any company looking to tap into the market. Indonesia is now considered one of the world’s most rapidly growing economies, which presents a vast opportunity for financial services providers.
First is the certain rise of digital banking and continued growth of e-commerce and mobile payments. These provide customers with greater convenience and more choices in how they access and use financial services.
Bank Indonesia reported that the total number of QRIS users in Indonesia reached 30 million in November 2022, and the figure is expected to increase to 45 million by 2023.
Financial services are being driven by growing demand for digital solutions among consumers and businesses alike. It has been transforming the way people make payments and manage their finances, as they offer a fast and convenient way to pay for goods and services.
Second is the emergence of green finance initiatives, now that environment, social and governance (ESG) has become the talk of the world. The Financial Services Authority (OJK) recently issued its green taxonomy guideline in support of the country’s sustainable finance program, and to ensure that all financial players and stakeholders are using common vocabulary regarding sustainable finance. This follows similar moves in China, South Korea, Japan and Malaysia.
Third, geopolitical tensions have been impacting the region’s financial markets. Rising commodity prices resulting from the conflict between Russia and Ukraine threaten to hinder Southeast Asian countries’ recovery from the pandemic, which can in turn heighten the risk of political and economic instability, including in Indonesia.
