Traversing Indonesia’s FinTech Landscape – Investment Perspective

Over the next few weeks, MEDICI brings you a series of articles exploring FinTech in the ASEAN region. The articles, each focused on a different ASEAN country, provide comprehensive insights into the FinTech investment landscape in the region.

ASEAN in Figures

ASEAN (the Association of Southeast Asian Nations) is the third-largest Asian region. It is home to more than 630 million people and one-fourth of the population lives in urban areas. ASEAN has an annual growth rate of 4.7% and USD 119.97 billion in FDI; it is also one of the fastest-growing regions as well as the seventh-largest economy globally.

Its population is young and educated with a literacy rate of over 80%, phone-savvy with more than 0.5 phones per person, and enjoys a low-to-mid unemployment rate of 0.5%–6.9%. ASEAN members also have an average to a high life expectancy of 69–82.7 years, and a gender parity of 49.9% males to 50.1% females.

So far, we’ve explored Thailand, Singapore, and Vietnam’s FinTech ecosystems from an investment perspective. In this article, we take a comprehensive look at another interesting ASEAN country – Indonesia.

Indonesia in Figures

With more than 250 million people, Indonesia is the most populated country in the region. Its largest city, Jakarta, is inhabited by more than 8.5 million people, and 53% of Indonesians live in urban areas.

While Indonesia shows strong growth at 4.8% per year, high cell phone penetration with 1.3 phones per person, and a high literacy rate with 95%, it has a relatively high unemployment rate of more than 6%. More than 25 million people live below the national poverty line. With life expectancy at 70 years, Indonesia performs lower than the rest of the ASEAN region.

Indonesia is ranked 91 in terms of ease of doing business. The country performs particularly poorly when it comes to starting a business and ranks at 151. Foreign ownership is also limited at up to 40% for banks and NBFIs. Besides this, there are some tax incentives; the corporate tax rate is 25% with a tax break if 40% of capital is traded on the stock exchange. In addition, if turnover is below IDR 50B, there is a 50% tax rate reduction. There are also incentives for new investments as well as investments to expand the current business.

Macroeconomic Overview

Indonesia is the largest economy in Southeast Asia with nearly half of the region’s GDP. It has been growing at a steady 5% to 6% for over the last 10 years and is predicted to be in the top 10 largest economies in the world by 2030.

In 2015, the Indonesian economy underperformed due to prolonged delays in government spending, sluggish private investment, and the impact of weak global markets on external sector growth. FDIs went below 2% of GDP, which happens to be their lowest levels since 2010.

However, the economy is expected to recover in the future from an increase in government spending (over 15% of GDP). The country’s fast-growing middle-class and affluent population is expected to double from 70 million in 2012 to 140 million in the next three years and drive economic expansion. Furthermore, in the next 30 years, two-thirds of Indonesians are expected to live in cities, which will also drive the country’s growth.

Indonesia’s Financial Sector: A Snapshot


The retail and institutional demand for mutual funds is expected to rise, driven by a young and growing population with the need to build a financial base; rising disposable income; and increasing awareness about the benefits of investing. At the end of 2015, there were an estimated 170 million people in the middle-class segment, which is a four-fold increase since 1999. The further growth of this segment could propel demand for mutual funds. There were 300,000 mutual fund investors in October 2015. Financial services regulator OJK aims to increase this to five million investors by 2017.

Life insurers are moving investments towards funds, becoming increasingly frustrated with banks’ declining interest rates, which diverts their investments from bank deposits to mutual funds. An improving financial market has also bolstered the net asset values of mutual funds which increased 25% Y-O-Y to IDR339 trillion (USD $25.4 billion) in December 2016.


Indonesia’s funding industry is still very small and underdeveloped in comparison to its SE Asia peers due to several barriers:

  • Changing the mindset of Indonesians from being savers to investors

  • Difficulty reaching a widely dispersed population

  • Restrictions placed on asset types mutual funds can hold

  • Restrictions on foreign-based asset managers who are not permitted to sell funds locally without establishing a local presence

  • Lack of qualified local talent and an onerous recruitment process for foreigners

The Meeting Common Reporting Standard (CRS) obligations came into effect on January 1, 2017, for Indonesia’s financial institutions. They now face the challenge of putting in place the required processes and infrastructure to meet CRS obligations without incurring excessive IT-related costs.


According to industry research, 92% of Indonesians surveyed said they were open to using robo-advice. This bodes well for new market challengers such as retailers and supermarkets looking to enter the market with robo-advisors. It is also a call to existing fund firms to step up their robo-advisory services in order to retain market share.

With Indonesia’s increasing rate of smartphone penetration (47% as of June 2016), online fund platforms and mobile applications represent another opportunity which could enable fund managers to reach Indonesia’s geographically dispersed investors. Around 60% of the population (157 million) is yet to begin investing, which offers significant potential.

Supportive reforms could also boost growth for Sharia funds. Although the uptake of Sharia funds has been low, recent regulatory reforms are encouraging greater growth.

Regulatory Developments

A new rule was enacted in June last year – Mutual Funds in the Form of Collective Investment Contracts (CIC). Rule No. 23/2016. Changes include giving custodian banks a greater role in the supervision of investment managers. The new rule is intended to further develop mutual funds and market practices as well as increasing investor protection.

Regulation prohibits FinTech lenders from giving investment advice. The OJK is finalizing new regulations that will impose stricter requirements on FinTech lenders to safeguard the industry and consumers. This includes prohibiting FinTech lenders from offering investment advice to lending customers.

New Data Protection Regulation: the Government Regulation No. 82/2012, which was enacted on January 1, 2016, sets out what firms must do to protect personal data. Firms will need to have compliance programs in place to be fully compliant by December 1, 2018.

Key Themes of the Indonesian Banking Sector

The underpenetrated banking sector presents ample room for growth. Banking penetration is currently amongst the lowest in Southeast Asia with <40% credit-to-GDP ratio and less than USD $1.2k of deposits per capita. Since 2006, loans and deposits have grown at a CAGR of 20% and 16%, respectively. Loans are expected to grow at 12–16% for the next five years driven by increasing penetration in the banking sector, growing consumer base, and the rise of the middle-income population. Mortgage and unsecured personal loans are the key growth drivers of the Indonesian banking sector.

Indonesian banks’ NIM and profitability remain one of the highest in the region. It is a highly profitable sector driven by a net interest margin of 5%, the highest in Southeast Asia. Falling interest rates, slowing domestic economy, rising bad debts, and weak commodity prices are expected to impact the profitability downward, particularly for medium and smaller banks. Funding in Indonesia is primarily made via time deposits. The LDR ratio stands at over 90% for the industry and funding is posing a constraint to growth.

Asset quality remains the biggest overhang. Bank asset quality is expected to remain under pressure with NPLs rising further to 3.5% by the end of 2016. Rapid growth in investment related loans for mid-sized corporate and SME segments could see the largest deterioration in asset quality. Large banks have strong liquidity profiles and higher core capital to weather the increasingly challenging environment.

Multi-Finance Industry Overview

Consumer finance accounts for 67% of Indonesia’s multi-finance industry. It grew 10.3% YoY in 2014. Consumer finance is followed by leasing, which accounts for 31% of the total industry. Consumer finance registered a strong CAGR of 17.8% since 2008. However, due to a tighter monetary policy in 2014, total financing value only managed to grow at 5.2% Y-O-Y in 2014. Driven by industrialization in the past few years, Indonesia’s growing middle class has led to higher consumer spending, which creates a promising outlook for the sector.

Automotive finance, which is a dominant segment of the consumer finance industry, remains stagnant in the short term. Automotive finance is highly correlated with automotive sales which have been hit hard by a decline in sales; it is expected to remain stagnant in 2016.

In addition, residential property provides a big opportunity for the multi-finance industry. While overall housing financing is still dominated by banks, the market for residential property provides a big opportunity for the multi-finance industry due to lower down payment requirements. In spite of rising credit costs, residential property sales growth hasn’t been significantly affected as the demand for residential property seems more inelastic compared to commercial property. Outstanding mortgage financing has grown at a rate of 4% every quarter and has increased from USD $17 million (IDR 231 trillion) in Q1 2013 to USD $23 million (IDR 325 trillion) in Q2 2015.

OJK has also expanded the business scope of multi-finance companies, allowing them to finance working capital and multipurpose loans. It enables firms to increase fee-based income by selling other financial products such as mutual funds and insurance.

FinTech Investors – Indonesia

Similar to the scenario in Thailand, Singapore, and Vietnam, FinTech-focused VC funds and sector-agnostic funds investing in FinTech, have invested in Indonesia.

FinTech-Focused Funds

Mandiri Capital is the only FinTech-focused investor among the 10 most active investors in the financial services technology industry in Indonesia. East Ventures, Kejora, and 500 Startups dominate the market in a number of financial services deals. The largest Indonesian financial institution venture capital arm is also part of two of the five largest FinTech fundraising rounds in the country: Moka (USD $3.9 million) and Cashlez (USD $2 million).

Strong Local Investors

In terms of volumes, there is a mix of foreign and local players with two leaders: Singaporean venture capital firm East Ventures and local contender Kejora. The Singaporean firm is clearly ahead in a number of deals across industries with 49 deals vs. 26 for Kejora; Alpha JWC and Convergence Ventures (two Indonesian funds) closely follow 500 Startups, which is the second contender. Furthermore, while looking at the number of FinTech deals, local investors Kejora, Alpha JWC, Convergence Ventures, and Mandiri Capital have a strong presence and have invested in more companies than foreign investors. In terms of value, similarly to Singapore, major deals such as Tokopedia and Traveloka see a strong presence of global players among the investors. However, in FinTech and smaller deals of less than USD $4 million, the local players which were mentioned previously have a stronger presence.

Accelerators & Incubators

  • Idea Box Accelerator: Idea Box Accelerator is Four-month program working closely with Indosat and Ooredoo Group to provide entrepreneurs with network and global opportunities. It was founded in 2013 and targets telecom, mobile, and the internet. It offers a seed funding $100K. Notable startups: Wobe, Gogonesia, and Shoop.

  • Ideosource: Ideosource is an incubator and venture capital firm founded in 2012. It targets online content, media, advertising, e-commerce, payment, and mobile infrastructures. Provides undisclosed seed and early-stage investments. Notable startups incubated: and ACommerce.

  • Jakarta Founder Institute: Jakarta Founder Institute offers a four-month program and is sector-agnostic but does not offer investment support. Notable alumni: Kejora and BuatKontrakt.

  • Alpha Startup Bootcamp (1337 accelerator): Alpha Startup Bootcamp offers pre-seed funding of $5k along with different benefits, co-working spaces, and business support. It was founded in 2016 and focuses on tech startups.

  • Plug and Play Indonesia: Plug and Play Indonesia is a part of the global accelerator that has invested in more than 550 startups globally and partnered with more than 200 corporations & universities. The program lasts for 14 weeks and startups can receive up to $50K in funding. Notable startups: Brankas and KYCK!

  • GnB Accelerator: GnB Accelerator is a joint venture between Fenox Capital and Infocom. It was launched in 2016 and targets the mobile, consumer internet, and health IT sectors. The accelerator provides $50K in funding over three months. Notable startups: Pomelo and Booklapak.

  • Techbator: Techbator is a technology startup incubator launched in 2011. Notable startups incubated: Buqu and Sura.

  • Batavia Incubator: Batavia Incubator is a joint venture between the Japanese firm Rebright Partners and Indonesian financial services firm Corfina Group. It was launched in 2011 and targets internet & mobile services. It offers seed, bridge, and series A funding. Notable startups incubated:

  • Indigo Incubator: Launched in 2012, Indigo Incubator offers a program called Indigo Nation under Startup Digital Indonesia. It offers mentoring, market access, API support, co-working spaces in 15 Indonesian cities, and access to a global network of accelerators and incubators. The incubator is sector-agnostic and provides up to $150K in seed investments. Notable startups incubated: Kakatu, Jarvis, and X-iGent.

  • GEPI: GEPI is a private NGO established in 2011 and targets tech startups. It aims to support early-stage entrepreneurship in the country via incubation and angel investment

  • Kolaborasi: Kolaborasi is a digital incubation program that aims to provide remote modules assistance. Established in 2013, Kolaborasi targets the digital, social, and creative ventures sectors. The program lasts 12 to 14 months. Notable startups incubated: and Azzam.

  • Skystar Ventures: Skystar was founded in 2015 by the Universitas Multimedia & Kompas Gramedia Group as a tech incubator and co-working space. It is a 12-month program that taps into KGG network and distribution channels to help entrepreneurs to operate their business and build a customer base quickly. It targets internet mobile, social education, and e-commerce sectors. Notable startups: CaterInc and JobMine.

  • Merah Putih Incubator: Established in 2010, Merah Putih is a startup accelerator, incubator, and early-stage investor which targets FinTech, SaaS-based or community-based startups. It provides undisclosed seed, early-stage, and Series B funding through another investment arm. Notable startups incubated: Ansvia and Kurio.

  • AccelerAsia: AccelerAsia provides participants with roadshows, acceleration, and growth services. Present in Indonesia, the Philippines, and Singapore.

  • Others: Binus Startup Accelerator, Google Launchpad Accelerator, Inkubator Bisnis Primakara, KLN Play, and Grupara Incubator.

Associations & Angel Networks

ANGIN (Angel Investment Network Indonesia) is one of the official partners of Plug and Play Indonesia. ANGIN is the first and largest angel investor network in Indonesia. It gathers 57 high-net-worth individuals who pool resources together to engage in early-stage investment and mentoring. The ANGIN team supports entrepreneurs on their fundraising journey by equipping them with the right assets and connecting them with like-minded investors to ensure these entrepreneurs get the right resources at the right terms.

ANGIN investors

  • A. Vranjes (AWS)

  • A. Zain (Kejora Ventures)

  • A. Ariotedjo (Grupara Ventures)

  • A Sinclair (500 Startups)

  • A. Sugiharti (Investment Consultant)

  • Budiman (Bayoran Teknik Mesin Mie)

  • B. Tanoto (Tanoto Foundation)

  • C. Lee (Proses Data)

  • C. Angkasa (Little Lights Capital)

  • C. Djojonegoro (Siregar and Djojonegoro)

  • D. Anwar (Journalist)

  • D. Nurjadin (Cardig Aero Service)

  • E. Tan (Twin Focus Tech)

  • G. Aluwi (PT Rodamas Wirasakti and PT Mitra Angkasa)

  • G. Tahir (Mayapada Hospital)

  • H. Hajadi (PT Ciputra Surya Tbk)

  • I. Tjam (Indomog)

  • I. Kolonas (Vasham)

  • I. Jenie (7-eleven Indonesia)

  • J. Joe (Alpha JWC)

  • J. Soetanto (Aluplus)

  • J. Arias (Diplomat at The EU)

  • L. Angkosubroto (PT Gunung Sewu Kencana)

  • L. Tanmizi (Meek)

  • M. Hutagalung (PT Dua Cahaya Anugerah)

  • M. E. Pangestu (Former Minister of Trade)

  • M. A. Yoshihara ( SATO KOGYO)

  • M. Kim (CEO Suite)

  • M. Murdaya (Juara Skincare)

  • M. Stephanie (Mobiliari Group)

  • M. Sutanto (Roheda Group)

  • N. Akili (Salila)

  • N. Purnomo (Bluebird)

  • P. Hsieg (01VC)

  • P. Koneru (Rescom Holdings)

  • R. Lamba (Kadence Indonesia)

  • R. Papp (Challenger 88)

  • S. Koshan (PT. Sinar Kharisma Padjajaran)

  • S. Tiwan (Carsurin)

  • S. Kamdani (Sintesa Group)

  • S. Hermawan (Arbor and Troy)

  • S. W. Sujono (SF Consulting)

  • S. Alisjahbana (Femina)

  • T. Sumartini, T. Gunawan, V. Colodam (YCAB)

  • V. Lukito (Berkeley Investment Asia)

  • V. Fungkong (Indonusa Group)

  • V. Thomas (Titanworld Ventures)

  • W. Hafenmayer (Challenger 88)

AngelList’s Most Active Individuals (VCs)

  • S. Rahman (Telenor)

  • M. Kunitzky (LaunchPad)

  • J. Petote (Angel Investor)

  • M. Pui (PwC)

  • E. Lee (Coffee Ventures)

  • J. Chan (Neoteny Labs)

  • P. Santos (Wavemaker)

  • D. Jones (Global Founders Capital)

  • V. Lauria (Golden Gate Ventures)

  • KY Lim (Monk’s Hill)

  • J. Arias (Angel Investor)

Others Notable Investors

  • S. Dhanuwardoyo

Top Investors in Indonesia

  • East Ventures: East Ventures is a Singapore-based venture capital firm which has invested in more than 150 companies in Asia in the range of USD $0.3–$0.5 million and up to USD $4 million. It is also the most active venture capital investor in Indonesia. The fund raised over USD $28 million from its limited partners and has participated in seven FinTechs fundraising in Indonesia. These companies raised over USD $7 million from investors. With 7 FinTech investments out of 49 investments in total in Indonesia, East Ventures has allocated 15% of its Indonesian portfolio to the financial technology industry. The VC firm has co-invested with multiple investors in some of the largest fundraisings of the country: Tokopedia (USD $1.3 billion), Traveloka (USD $500 million), and Moka (USD $3.9 million).

  • Kejora: Kejora is a local subsidiary of the Switzerland private equity and venture capital firm Mountain Partners AG. Kejora is an Indonesian accelerator and venture capital firm specializing in early-stage, seed-stage, startups, and growth capital investments. The firm invests in FinTech, digital media, logistics, and human resources. It typically targets Southeast Asia and is currently raising its second fund with a target of USD $80 million. The firm seeks to invest USD $2–$5 million. Kejora has participated in five FinTechs fundraising in Indonesia. These companies have raised over USD $5 million from investors. Kejora has made one investment out of five in the FinTech industry in Indonesia and is the second-most active investor in the country. The firm has co-invested with Ideabox in Pawoon, which is the fourth-largest FinTech deal in the country (USD $3 million).

  • 500 Startups: 500 Startups is a Silicon Valley incubator, venture capital firm, and accelerator that specializes in seed investments in small-and-medium-sized startups, as well as early-stage, post-seed, pre-Series A, and late-stage funding for FinTechs. It prefers to invest $0.05–$1 million for a 5–10% equity stake. 500 Startups raised more than half a billion USD from its limited partners (LPs). 500 Startups is the third-most active investor in the country and has participated in three FinTechs fundraising locally. These companies raised less than USD $1 million from investors. 500 Startups has allocated 15% of its Indonesian portfolio to the financial technology industry in the country. Some of 500 Startups’ notable investments outside the financial sector are HappFresh (USD 12 million) and Qraved (USD 9.3 million).

  • Fenox Venture Capital: Fenox Venture Capital is a Silicon Valley-based venture capital firm founded in 2011. It specializes in series A, Series B, final round, seed, startup, mid-venture, late-venture, growth capital, early-stage, growth-stage, pre-IPO, and advanced growth round investments in the FinTech sector. The venture capital firm raised more than USD $80 million from its LPs and considers investments between USD $0.025–$10 million in each startup. It has participated in three FinTechs fundraising in Indonesia. The three companies raised over USD $5 million from investors. Fenox Venture Capital has allocated over 16% of its portfolio to the financial technology industry in Indonesia. The firm was one of the co-investors with East Ventures in Moka (USD $3.9 million).

  • Alpha JWC: Alpha JWC is an Indonesian-based venture capital firm specializing in seed, early-stage, growth-stage, Series A, and Series B funding. It has participated in three FinTechs fundraising in Indonesia, which have raised over USD $14 million from investors. Alpha JWC has allocated over 16% of its local portfolio to the FinTech sector. The investor has participated in some of the largest fundraisings in the country, being a co-investor on Tokopedia (USD million 1.35 billion), Traveloka (USD $500 million), and the largest FinTech deal in the country: UangTeman (USD $13 million).

  • Convergence Ventures: Convergence Ventures is an Indonesian venture capital firm that specializes in Series A and B investments. It usually invests USD $1–8 million and has raised over USD $30 million from its limited partners. The firm invests in the Tech sector and has participated in three FinTechs fundraising locally. The three companies raised over USD $4 million from investors. With 3 out of 17 investments in the FinTech industry in Indonesia, Convergence Ventures has allocated more than 17% to financial technology. Along with East Ventures, Fenox, and other investors, Convergence has invested in the FinTech Moka (USD $3.9 million). Convergence has participated in large fundraising rounds outside of the FinTech industry with Sale Stock (USD $27 million) and Nida Rooms (USD $11 million).

  • Mandiri Capital Indonesia (MCI): Mandiri Capital is the corporate venture capital arm of the country’s largest financial institution, Bank Mandiri. It has a fund size of USD $37 million and acts as a bridge connecting investors and entrepreneurs to the ever-evolving Financial Technology (FinTech), InsurTech (UBI, Telematics), Data Analytics, Loan Application/Financing, Money Transfers/Remittances, Crowdfunding, and Payment Solutions sectors. It seeks to invest in seed to series A rounds in the range of USD $0.5–1 million. The MCI has participated in three FinTech funding rounds in Indonesia. The companies raised over USD $6 million from investors. Mandiri Capital has been part of two of the five biggest deals in the FinTech industry in the country: Moka (USD $3.9 million) and Cashlez (USD $2 million).

Disclaimer: The views reflected in this article are the views of the author and do not necessarily reflect the views of his employer or any other professional affiliations.