There is indeed no one-size-fits-all answer to the question of what the future of finance in Indonesia will look like. However, we can expect four key trends and developments to watch out for.

Understanding them is essential for any company looking to tap into the market as Indonesia is now considered one of the world’s most rapidly growing economies and to present a vast opportunity for financial services providers.

First, it is for sure the rise of digital banking and the continued growth of e-commerce and mobile payments. It provides customers with greater convenience and more choice in how they access and use financial services. Bank Indonesia reported the total number of QRIS users in Indonesia reached 30 million in November 2022 and is expected to increase to 45 million by 2023. The service is being driven by the 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.

As environment, social, and governance (ESG) become talks of the world, the emergence of green finance initiatives is the second to watch. Indonesia Financial Services Authority (OJK) recently issued a green taxonomy guideline in supporting the Sustainable Finance Program in Indonesia and to ensure that all financial players and stakeholders are using a common vocabulary regarding sustainable finance. It followed China, South Korea, Japan, and Malaysia.

Third, geopolitical tensions have been impacting the region’s financial markets. Rising commodity prices because of the conflict between Russia and Ukraine, threaten to hinder Southeast Asian countries’ recovery from the pandemic, which in turn can heighten the risk of political and economic instability, including to Indonesia. The nature and impact of China and United States tension is also a concern for Indonesia, its partners, and stakeholders. The sour relations among giants Indonesia deals with, between China and India or between China, Japan, and South Korea will also increase the risks.

The evolving regulatory landscape becomes the latest with Indonesia strengthening their regulation to promote financial inclusion and stability. These include imposing stricter capital requirements on banks and the general public’s funds in insurance now being guaranteed. This is, however, aimed at protecting investors and promoting confidence in the markets.

There are a number of potential impacts of current developments on the future of finance in Indonesia. One is the increasing integration of the Southeast Asian financial markets. Two central banks, Bank Indonesia and the Bank of Thailand, recently announced their agreement to implement cross-border QR payment linkage. It is reported that 76 payment system providers from both countries have joined the project. This is likely to lead to more competition and higher standards in the financial services industry.

Another impact is the rise of digital banking and mobile payments. This is making it easier for customers to access banking services and make payments, which could lead to a decline in traditional banking services. Finally, the growth of alternative financing options such as peer-to-peer lending and crowdfunding is providing new opportunities for businesses to access funding.

It is essential for businesses to adapt to stay ahead of the competition in a constantly changing business environment. Banks and financial institutions (companies) need to review their business models, operating environments, and strategies regularly to keep up with current market trends and make sure their business is as successful as possible. It is important for businesses to be open to new ideas, as this can help them keep up with the ever-changing market.

It is also important to invest in technology and innovation. By investing in new technologies and ideas, companies can stay ahead of their competition and stay competitive in the ever-changing market. It will help companies confront globalized competition, rapidly changing customer needs, and technological shifts.

Furthermore, it is essential for businesses to focus on customer needs and experience. By putting the customer first, and understanding their needs, companies can ensure they are providing the best possible product or service and staying one step ahead of the competition. Companies should strive to be customer-centric, analyzing customer feedback and providing tailored solutions to meet customer needs.

Lastly, having a team of experts can help a business stay ahead of the competition. Companies should focus on building a strong team of professionals with expertise in the relevant areas of their business. This could involve hiring experienced professionals, or training and upskilling existing staff. An experienced team of professionals can provide valuable insights and strategies that help companies have the best team possible to stay ahead of the competition.

The future of finance in Indonesia is an exciting one that promises increased opportunities for businesses and investors alike. With the emergence of new technologies, innovation, and financial inclusion initiatives, there are more avenues than ever before to access capital and take advantage of booming markets.

Singapore, Hong Kong, and Shanghai keep strides toward modernizing their financial services industries with both traditional banking institutions as well as fintech start-ups. While Seoul is more determined than ever to walk the road map and catch the eyes of investors and institutions leaving Hong Kong, Tokyo remains an attractive place to do business.

Indonesia is emerging as confident middle-income countries and promising lands for investment.

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The write is account director at Baldwin Boyle Group. The views in this article are personal.