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Two popular companies from China, Alipay and WeChat Pay, have entered the market in Indonesia. Last year these two fintech firms went viral when national media reported that they could be used by Chinese tourists in Bali. This could have meant lost income for Indonesia as the transactions between tourists and merchants did not involve Indonesian institutions. To prevent loss, the government issued several regulations to anticipate the cross-border payment risks.
Coordinating Economic Minister Darmin Nasution said that while fintech could make financial services accessible to more people compared to conventional financial institutions, there were three threats related to the mushrooming of fintech services.
The clamor of fintech lending in recent years should not distract us from the various government outreach financial inclusion programs that help more Indonesians gain access to not just loans but also saving, insurance and payment services.
Right now, there are 113 fintech lending companies registered with the OJK, seven of which have obtained licenses. This does not include hundreds of illegal players. Given the iron law in business: When many players enter, many will go out, who will stay in business?
Contrary to the common assumption that FinTech benefits are only enjoyed by those who are technologically literate and connected to the internet, research conducted by the Indonesian Institute of Sciences (LIPI) found that those who are marginalized in regard to technological access and capability can better adopt digital payment methods.
Many of the founders of today’s top unicorns weren’t computer science majors or holding distinguished MBAs–Evan Spiegel of Snapchat studied product design, while mobile trading app Robinhood’s Vladimir Tenev and Baiju Bhatt studied mathematics and physics.
The past several years have seen the rise of online-based P2P lending firms in Indonesia. These firms, often called “fintech (financial technology) P2P”, serve a very important niche market: bringing financial services to portions of the population previously considered unbankable.
