How LinkAja Might Win ?

LinkAja has officially grand-launched last June. It represents collective efforts of Indonesian BUMN (state-owned enterprise) to gain market share in emerging digital payment space. Clashing with the likes of Gojek, Grab-backed OVO and Alibaba-backed DANA.

Images from LinkAja.id

Things are not starting smoothly for them. The grand launch has been delayed couple of times due to technical issues, experts doubts their agility to compete and they’ve slouched to 4th place below DANA. Even though a year ago, T-Cash was fighting head to head with OVO to gain 2nd place.

So whats the move going forward ? Heres my quick thoughts on how LinkAja can win

Non-Smartphone Features

Gopay, Ovo and DANA all require smartphone to use. On the other hand, telco-based wallet such as T-Cash can be operated from dumb phones using USSD command. LinkAja can leverage this to offer more inclusive experience.

To process payments, user can just provide their mobile phone and approve payment via sms-delivered OTP. This could be beneficial to push LinkAja usage in rural areas where mobile internet coverage is spotty.

Digitizing Government Payments

In my experience, government payments are mostly in cash. From paying traffic fines, renewing your driver license or paying annual vehicle tax, LinkAja could be leveraged to make all of this cashless. Toll-road, Commuter Line and TransJakarta has been successfully converted to 100 percent cashless hence its not impossible to expand this into any sort of government payments.

For government institutions, cashless payments could make their payment processing more efficient and reduce fraud as well. This could be incentives for policy makers or public institution leaders to push LinkAja adoption in their organization. LinkAja could capitalize this putting registration and cash-in booth on every government institution that accept cash payment.

Leveraging Combined User Base

LinkAja is an evolution T-Cash. Telkomsel has 100 million existing user base. There also four state banks backing LinkAja up : Bank Mandiri, BNI, BRI and BTN. The four combined (also known as HIMBARA) represented almost 200 million accounts. Not to mention user contribution from Pertamina and Jiwasraya.

As i mentioned in my previous article, massive user base dont mean much if there are no clear benefits for Telkomsel or HIMBARA to use LinkAja over other wallet provider.

Good example of this is initiative to link integrate current account to LinkAja balance. Hence if you are one of HIMBARA bank users, you dont have to constantly top up, just link your account and LinkAja app could substitute your card as payment method.

Another ideas might be to use LinkAja as easier method to do peer to peer transfer. User can transfer money from any of HIMBARA bank to any mobile phone number since primary identifier for LinkAja (0r any other wallet) is mobile number.

Loyalty points is another angle that state owned enterprise could collaborate with LinkAja. Points from Telkomsel top-up, Pertamina petrol station, any payments from HIMBARA banks will be consolidated in LinkAja.

The key is to make the experience using LinkAja much much better for existing BUMN customer base compared to non-user. If its not, then LinkAja would not have advantage over other big 3 wallet provider no matter how many state enterprises backing them up.

Investing : Next Frontier in Indonesian Fintech ?

In current Indonesian context, when somebody talk about fintech they mostly refer to lending. In DailySocial surveys, more than half of respondent associated fintech with online lending services with payment as a close second. Number of fintech funding activities also skewed toward this direction with 60% of total 14 deals in 2018 went to P2P lending startups. If you browse through fintech list in OJK website, only P2P lending are listed even though insurance and investment fintech falls under OJK supervision. There are currently 113 registered lending fintech as of June, far more than any other types of fintech combined.

Two things from this: Indonesian fintech growth so far still contributed by lending thus other financial services is underutilized. This leaves lots of room to grow for fintech ecosystem going forward. Second, with lending companies already reach hundreds, fintech players need to think hard what will be the next play.

So what could be the next phase for Indonesian fintech ? my take is on investing. Of all the financial services, it is the least inclusive with less than 1% registered investors in a 270 million population. Number of investors has been growing double digits for four years straight and most of the growth are contributed from younger segments.

In this article, i wrote overview on investing landscape in Indonesia, challenges and how this sector has big potential to drive further fintech growth going forward.

Continue reading “Investing : Next Frontier in Indonesian Fintech ?”

Second Act : OVO Strategy to Expand Beyond Wallet

This is series of study case analysis that i like to write from time to time. I am a big fan of Ben Thompson’s Stratechery and these essays are inspired by Ben’s work. Check out my last post on LinkAja.

On second week of April, Dealstreetasia broke the news that Indonesian payment wallet provider OVO has acquired online mutual fund startups, Bareksa, for 20 mio USD. This news came just merely a month after OVO acquisition of P2P Platform Taralite. Taralite acquisition has enabled OVO to offer credit-card-like Paylater which at the moment only available in Tokopedia. Bareksa on the other was used to power OVO Invest feature which can be accessed after user do advanced KYC by submitting their E-KTP.

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Seeking information in OVO customer service booth. Pic credit from Metropolitan.id

As a country with massive unbanked population and asymmetric banking industry , Indonesia is a lucrative ground for fintech. These recent developments is a clear attempt to expand into wider financial services and having Lippo and Grab as their backer, OVO have ample warchest to start landgrab in multiple fronts.

In this essay, i will share my analysis on rationale, challenge and predictions on OVO next step in Indonesia financial industry.

Continue reading “Second Act : OVO Strategy to Expand Beyond Wallet”

Mengapa saat ini di Indonesia, startup fintech lebih banyak dibanding startup lain

Ini sebenarnya adalah thread Quora yang saya jawab beberapa waktu lalu Karena responsnya cukup bagus, saya menambahkan beberapa materi dan memposting ulang disini.

Platform Quora ini cukup menyenangkan dan saya aktif disana. Cek kesini 
untuk melihat semua jawaban yang saya tulis.

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Lanskap fintech di Indonesia. Gambar dari Convergence Ventures
Continue reading “Mengapa saat ini di Indonesia, startup fintech lebih banyak dibanding startup lain”

Three Challenges Startup Faced in Serving Indonesia’s Unbanked Population

In Indonesia, access to basic financial service such as saving and lending is a priviledge. The country with more than 250 million people has only less than 40 million recorded bank account according to World Bank. The country stands at the top of  Asia Pacific in terms of unbanked population with three quarter of total population are still outside of conventional financial system.

At glance, these statistics looks bleak. But for entrepreneurs and startups, it means massive opportunity fintech. Indonesia is currently a fintech hotbed with more than 150 startups and record-high investment of USD 57 million in 42 deals by last year alone. Half of that deals went to lending and payment startups.

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Picture of shallot sellers in Jogja, one of the many millions unbanked population in Indonesia. Photo by Andy Al Mesura on Unsplash

I work as a product and business development guy in a peer-to-peer lending startup. Our startup focus is to provide microlending to millions of unbanked and underbanked women entrepreneurs in Indonesia. In this post, i will share three challenges that i have to deal on a daily basis. The challenges will slightly skewed to lending business model but i try to make it relevant for other fintech as well.

Lets start!. Continue reading “Three Challenges Startup Faced in Serving Indonesia’s Unbanked Population”

Indonesia Fintech Industry Updates #3

OCBC Become The First Bank in South East Asia To Open Public API

Singapore-based bank OCBC made an interesting digital move just recently. The bank embraced the fintech wave by officially opening their internal data to be used as public API services called Connect2OCBC. This move is the first one in the region and no banks has ever done this before even though recently BCA has already moving in the direction by holding a Hackathon. Using this API, software developers can programmatically use OCBC’s data to enrich their own services.

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Right now Connect2OCBC offers four different API access :

  • Branch Locator : Give location data on all OCBC branch and their opening hours
  • ATM Locator : List OCBC ATM machines location
  • Smart Card Advisor : Give recommendation on perks and rewards for OCBC card holder
  • Forex Rate : Give up to date FOREX rate

Quoted by The Edge Market, OCBC Senior VP for Group Operations and Technology Praveen Raina said that the bank aimed to create a ‘data social network’ which facilitates free flow of certain non-customer data that will benefit any third party and the community as a whole in a secure manner. Praveen added that OCB has been in discussion with several fintech startups and real estate firms in order to help them make an optimal use of this API’s.

“As we mature, we see more and more collaboration with third party app developers, and that’s where the ‘API economy’ comes in. Organisations that don’t do this will be left behind. This is no longer a matter of choice, whether we do it or not,” he added.

Developer manual and use case examples are available on Connect2OCBC site. Being asked about future plans, The bank are focusing to add more services to the platform and the additional services expected to be ready the end of the year. However there are still no information whether the data will include OCBC presence outside Singapore (e.g Indonesia).

More information on this : https://e27.co/no-kidding-ocbc-just-became-the-first-bank-in-southeast-asia-to-have-an-open-api-20160517/

Doku & Dycode Opened Indonesia IoT Challenge 2016

Indonesia online payment startup Doku held a developer competition called Indonesia Internet of Things (IoT) Challenge 2016. This competition invites young Indonesian software developer to submit their creative IoT products which integrates with Doku payment platform. Partnering with software development house DyCode, Doku offered total prize of 30 million IDR for the winners.

In the press release, Doku’s CEO said that this competition aimed to encourage young developers to show their talent and solve real problems using IOT and Payment platform. This competition is open for anyone and participant are free to choose their preferred programming language and IoT tools.

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Participant will be judged on several criteria :

  1. Simplicity of the solution
  2. Technology understanding of the participant
  3. Hardware efficiency
  4. Esthetics and design
  5. Bonus points for good implementation of DOKU API in the solution

Submission is currently open until 28th of May and finalist will be announced on 5th of June 2016.

More information here : http://edu.dycode.co.id/idiot-challenge/

Finnet launched Finpay Link to Ease Payment via Social Media

Indonesian internet users has an unique habit of using Social Media as an e-commerce platform. Instagram and Facebook has become primary channel for online sellers to showcase their product especially for individual sellers and SME.

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Leveraging on this phenomenon, Telkom affiliated company Finnet launched Finpay Link, an online payment gateway services tailored for Social Media sellers. With Finpay Link, sellers will be able to create customizable link for their product and embed them easily in social media. This will enable customer to instantly pay the products just like in ecommerce marketplace sites such as Elevenia or Lazada. More convenient options compared to current practice of doing manual bank transfer.

Finnet CEO Niam Dzikri said that manual bank transfer has 65% error rate. Most of this errors contributed by human factor such as mistyping the account number and payment amount. Finpay Link aim to minimize these mistakes and made payment process in Social Media selling more straight forward. Apart from this, Finpay link also offer real time confirmation notifications and bank account checking.

More information here : http://www.indotelko.com/kanal?c=bid&it=finpay-link-transaksi-ukm-goes-digital

Kredivo, online financing services with real time credit scoring

Singapore based startup, FinAccel, recently launched online financing services called Kredivo. This services enable its users to buy things online on credit which they can also pay it in installments. To do this, FinAcccel partnered with local financing companies BFI Finance.

kredivo

What makes Kredivo interesting is it offers the capability to do real time credit risk assessment. When Kredivo users buy an item, the platform do a background check based on variety of information. There are about 1000 variables are considered to determine users credit score including self-reported data about income, employment, marital status, but also social network data like how often someone posts, how many friends you have, what type of phone you use etc.

Currently, Kredivo is integrated with 20 online merchants including e-commerce marketplace Jualo. Ahmed Aljunied, Jualo CTO said that they like the product very much and it give significant spike to the transaction.

” Consumers tend to be suspicious of online sellers, so the ability to receive their purchases without having paid a single cent is an extremely attractive proposition,” 

Kredivo user has 30 days to pay for the item, without additional fees or interest. If payment isn’t completed in 30 days, interest will be charged with 2.95 percent per month and late fees of 3 percent a month.

More information on Kredivo : https://www.techinasia.com/startup-unlock-ecommerce-growth-southeast-asia

Indonesia Fintech Industry Updates #2

Quadrupled Investment Growth On Asia Pacific Fintech Industry

In their recent report “Fintech and the evolving landscape”,  Global consulting company Accenture stated that Asia Pacific (APAC) region had a quadrupled growth in 2015 with to USD 4.3 billion. With this figure. APAC contributed almost 20% of total investment in global fintech industry (USD 22 Bio) and become the second biggest invested fintech region after North America. Most of these growths are contributed by China and India while in South East Asia, the hottest fintech hub still being lead by Singapore.

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In terms of business model, payment still reigns in a top spot for the most invested fintech business in APAC. However there is a huge surge in Insurance technology. From 2014 to 2015, Insurance Technology grow almost tripled even though the amount is still small compared to payment.  The report predicted that Insurance Technology will be the next hot battleground in APAC fintech landscape.

In this report, fintech startups were divided into two different types: Competitive and collaborative. Competitive-type challenges the established financial institutions while collaborative-type add value to the incumbent. Last year investment collaborative-type startup increased by 138 % while competitive-type only increased by 23%.

This is a good sign that going forward banks and other financial are more open to invest and collaborate with fintech startups. Trend which we already see in Indonesia right now with BCA and Mandiri leading the pack.

For more info, read the full Accenture report here.

Paypal launched fintech incubation program in Singapore

Global mammoth on online payment, PayPal has just launched fintech incubation program in Singapore. This program are opened for fintech startups in the region. Selected participant will go through nine month incubation in PayPal’s Technology Centre in Suntec City. The incubation program will include mentorship on finance and technology topics such as risk, compliance, core payment network and channel development. Participant will also given direct access to PayPal executives, external talents and also well-known industry experts.

PayPal

In order to be eligible, applicants should fulfill these criteria :

1. A fintech or technology startup
2. Have a minimum viable product (MVP) and early trial with customers
3. Armed with seed stage funding
4. Based out of Singapore or willing to relocate to Singapore

Acceptance will be judged based on team capability, business model, technology innovation and traction.

Apart from PayPal, VISA also setup strong footprint in South East Asia by opening their new Innovation Centre which also in Singapore. Align with the Accenture report, massive growth in fintech sector has been jump-starting the interest of global tech giants  to setup business in this region.

More information on this here (e27)

Gojek-Bluebird Partnership

In a surprising twist, recently Gojek has striked partnership with the Bluebird, the company they aimed to disrupt. During the press release, Head of Buebird Public Relation Teguh Wijayanto stated that this partnership improve hailing process for Bluebird. Gojek’s CEO Nadiem Makariem also said that the partnership will include technology, payment system and promotion. Currently the detail on this partnership is not yet clear. Both parties has stated that Gojek-Bluebird joint services will be revealed to public at the end of May 2015

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Focusing specifically in payment parts, this partnership will likely served as the first Go-Pay payment expansion outside Gojek own ecosystem. Considering this move and their recent GoPay campaign (50% discount  for all gojek services), Seems like Nadiem Makariem has a big ambition to dominant players in the universal payment platform going forward.

More information on this here (Kompas).