(L-R) AC Ventures’s Jeremy Sianto and Helen Wong, KoinWorks’s Jonathan Bryan, ALAMI’s Dima Djani, and BCG’s Sumit Kumar at a roundtable event in Jakarta
Over the last decade, Indonesia has witnessed a 6x increase in fintech players, rising from 51 in 2011 to 334 in 2022, says a new report jointly released by AC Ventures and Boston Consulting Group (BCG).
Initially, the growth was mainly driven by the payments segment. However, the fintech landscape in Indonesia is now diverse and dynamic, with lending, payments, and wealthtech becoming clear industries of the future.
The AC Ventures-BCG report Indonesia’s Fintech Industry is Ready to Rise charts the progress of fintech in the country across multiple sub-verticals, starting from the inception of fintech startups and the local digital economy in 2011 up until 2022.
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According to the report, fintech offerings are also experiencing a surge in customer engagement in Indonesia. The payments segment, which boasted over 60 million active users in 2020, is expected to have a compound annual growth rate (CAGR) of over 20 per cent until 2025.
More than 30 million active peer-to-peer borrower accounts were in the lending space in 2021. Meanwhile, the wealth segment had over nine million retail investors as of 2022, the VC Ventures-BCG reports notes.
The adoption of SaaS platforms is also growing, with six million SMEs currently using them, representing a 26x expansion over the preceding three years.
Investment trends also echo the diversification of Indonesia’s fintech market, with lending and payments no longer being the primary areas of interest. While lending and payments remain important, there is increasing investment into wealthtech, insurtech, and fintech SaaS.
The fintech market is expanding rapidly, with emerging players alongside established ones. Equity is targeted based on an operator’s or vertical’s maturity.
Early-stage funding deals receive over 80 per cent of the total invested capital. Funding from 2020 to 2022 reached US$5.4 billion, 2.7x more than in 2017-2019, adds the AC Ventures-BCG report. Growth and monetisation are the main focus in series D+ funding rounds.
In light of the current economic climate, investors are now looking for clear paths to profitability before a Series D. More than 80 per cent of fintech deals from 2020 to 2022 were for pre-Series C funding rounds, indicating strong support for early innovation. These trends will likely continue driving innovation and disrupting the existing financial services landscape.
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Additionally, new players in segments such as SaaS and insurance activities are emerging, indicating that fintech in Indonesia is maturing and moving toward more sophisticated products and services.
AC Ventures Founder and Managing Partner Adrian Li said: “The exponential rise in fintech players, burgeoning customer engagement, and escalating equity funding all indicate the sector’s vast potential. Our investment strategy aligns with this space’s most impactful and innovative enterprises.”
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