“Fintech” – an intersection of financial services and technology – is taking the traditional financial world by storm. Indonesia is no exception, with a fast-evolving ecosystem that includes a host of financial services offered by new generation fintechs.
Without access to formal financial services, many poor Indonesians continue to utilise informal services such as Arisan (ROSCAs), package saving schemes, and savings with individual agents.1 The bank deposit-to-GDP ratio in Indonesia (an indicator of deposit mobilisation) stands at 34.55% – much lower than Malaysia (130.25%), Cambodia (42.97%), and the Philippines (54.38%). This presents a big opportunity to all financial service providers, but especially new fintech players.
Remittances–both domestic and international–are a big market in Indonesia. However, most domestic remittances are largely informal and cash based. In a research conducted by Gallup, 50% of the Indonesians said that they sent money to their family or friends in the preceding 12 months, in “cash”. An average of US$ 87.40 is sent about 1.6 times a month! Evidently, a huge untapped market waiting to be facilitated via fintech players. This is especially relevant to mobile/e-money users where 71.5% of all transactions (by value) are person-to-person transfers.
Indonesia provides a US$10.5 billion international remittance market – an opportunity for new fintech players to add value to a market heavily dominated by money transfer operators such as Western Union. This is especially the case with remittance prices, averaging 5% to 8.60% of the amount sent.4 Notable fintech players in this segment such as WorldRemit have already partnered with Dompetku – a mobile money service offered by Indosat Ooredoo. However, there is a compelling need for focused players to cater to Indonesian migrant workers, predominantly based in Malaysia, Taiwan, Saudi Arabia, Hong Kong, Singapore, and the United States.
Access to Credit
 Refer to MicroSave blog on: Lessons from Informal Financial Systems: Indonesian Perspective
 Total deposit mobilisation= KES 62.8 billion; deposits through agency channel = KES 317 billion (performance as of Q3 2015)
 Average cost of sending money from countries such as Saudi Arabia and Unites States: https://remittanceprices.worldbank.org/