There’s no need to explain how online banking changed our lives over the past years. We have 24/7 access to our finances, the ability to pay bills without leaving the house, easily transfer money to friends and family members and even make fast international payments. However, not all markets are equally developed in this field.
Ivitech.Drive has been in the Indonesian market for almost a year now and I perfectly know all the strong and weak spots of this country’s banking sector.
Growing digital banking
According to Indonesia Emas 2045 Road Map, due to inflation and high bank interest rates the total online spending for SEA will grow up to 11 per cent (US$218 billion), and it’s the worst since 2017. However, the development of digital banking in Indonesia is taking huge steps. As of now, it is safe to say that mobile banking is dominating over traditional services. The number of users is growing as well as the Net Interest Income, which is expected to reach its peak in 2024 with US$3.57 billion.
This would not be possible without Indonesia’s thriving fintech ecosystem with numerous innovative startups. These companies are offering a wide range of services, such as estimating loan risks and lending money to SMEs and individuals.
Digital banking is helping Indonesians to solve problems that a few years ago were hard to imagine solving. It gives access to finances to rural citizens, therefore expanding the abilities for economic rise and development.
Even though Indonesia, just like any other modern country has tons of banks, most of them are not client-oriented and offer poor client service. This is exactly why FinTech projects, especially e-wallets, are extremely popular among Indonesians.
For example, our payment model requires small daily payments for the drivers. After deep analysis and research, we figured out that FinTech instruments, such as Ovo and different e-wallets, are the best fit both for us and our clients. They are user-friendly and constantly developing. I can also note DANA – an easy payment system with over 130 million users. I am personally excited to track their development and growth.
The number of users of such e-wallets in Indonesia is projected to reach 202 million by 2025 – which is 73 per cent of the whole country’s population. There’s no doubt that the Indonesian FinTech market is going to thrive this decade.
Of course, banks are seeing this trend, too. We already have new perspective banking sector players, such as Singapore-based Aspire, which is actively expanding to the Asian market and bringing the local client service to a new level. Aspire is a neobank – which means that they don’t have physical locations and provide their services online.
MSMEs should consider Allo Bank and Jago, which have lately presented several interesting features such as delayed payments of up to 100 million rupees and more.
Whats the future
As for predictions, it is absolutely clear that the client-oriented business model is the main trend for Asian banking and financial services for the upcoming years. Users want to be able to have easy and quick access to their funds along with a satisfying user experience.
The other possible trend is digitalisation. Everything that can be done without leaving the house should be done without leaving the house. Online services would save time spent by clients and money for the bank itself.
99 per cent of Indonesian enterprises are in the MSME sector – so the strategy of FinTech projects will include development in this direction. Banks and e-wallets will be fighting for rising companies to have them as their clients, and this will lead to creating win-win deals and solutions. It is reinforced by the fact that 99 per cent of the Indonesian economy consists of MSMEs, as well as 60% of the country’s GDP.
Last but not least – a commitment to sustainability. It is a global myth that South Eastern Asia users are not that interested in ESG initiatives. Based on our experience I can say – the greener, the better.
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