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 #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).

 

Indonesia Fintech Industry Updates #1

As part of my job as Innovation Management, on a weekly basis I deliver quick industry updates to the relevant XL Digital services team. Since i will be writing this for work, might as well post it here. Hope you guys find it useful. 

BCA Financial Hackathon 2016

Bank BCA in collaboration with DailySocial held Financial Hackathon event on  23-24th April at Segarra Ancol. By doing this event, Bank BCA encourage software developers and innovators to build creative fintech services using their recently launched Data API.

BCA Hackathon Hack By The Beach
BCA Hackathon Hack By The Beach

 For this competition, BCA invited several experts in Indonesia startup ecosystem to be the judges. Amongst them are Andrew Darwis (Kaskus), Anton Soehartyo (Touchten), Rama Mamuaya (DailySocial) and several others.

Three winners were announced at the end of this events.

Team Name

Product Name

Product Description

Fariz Tadjoedin

ChatBanking

Send money through instant messenger such as Line, WeChat, Kakao Talk etc

AMBISNIS

GueBayar

Apps to share bill payments amongst friends. User just need to take receipt picture and tag a friends. The bill will be splitted amongst the tagged users

ATOM

InstaPay

Bill payment apps. Integrated with BCA E-wallet

This initiatives can be seen as increasing commitment from Bank BCA to dive in into Indonesia digital ecosystem going forward.  No news yet on whether their Data API will be accessible for public or not. Considering the massive size of BCA, it will spark a whole lot new services if their API opened for developers and startups.

 More information on this : https://dailysocial.id/post/inilah-3-aplikasi-pemenang-finhacks-2016-hackbythebeach/

Mandiri Capital Indonesia Set Up IDR 500 Bio For Investing In Indonesia Fintech Startups

Apart from BCA, Bank Mandiri also had started a move to venture in Indonesia startup ecosystem. Earlier this year, this biggest bank in Indonesia launched their venture capital subsidiaries called Mandiri Capital Indonesia (MCI). For this venture, the corporation has set up IDR 500 bio funds to be invested in several potential startups.

Mandiri
Mandiri dive directly into startup ecosystem through Mandiri Capital Indonesia

On top of financial investment, MCI will give mentorship guidance to their portfolio startups and also give marketing platform to connect the startups with potential customers / partners (e.g using Wirausaha Mandiri platform)

Budi Gunadi Sadikin, Bank Mandiri CEO, explained that the company sees the emerging trend of disruptive technologies following the growth of Indonesia digital ecosystem. For example, Ride-hailing apps and various e-commerce players have changed the way Indonesians do business. Bank Mandiri cannot afford to be left behind in this movement hence the decision to jump in directly into Indonesian startup ecosystem.

 “Financial technology startups are in this money moving business. That’s why we (Bank Mandiri) entered this space with a focus on fintech,” Budi stated.

Mandiri Capital Indonesia will be focusing to invest in fintech and e-commerce digital payment space to leverage on existing Bank Mandiri’s business. Currently, the bank had more than 2 million merchants which mostly receive payments in cash.

More information on this : http://www.cnnindonesia.com/ekonomi/20160128123925-92-107346/suntik-modal-start-up-mandiri-capital-tak-beri-syarat-khusus/

Gojek Expands Gojek Credit into GoPay

Leading ride sharing startups Gojek have started to expand into cashless payment business by upgrading their previous Gojek Credit features into separate business called GoPay. Following this update, users can top up GoPay using bank BCA, Mandiri and BR with maximum balance IDR 2 million per user. Gojek users will be able to pay all of related Gojek services (Gofood, Goclean) using GoPay.

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Gojek Credit transformed into GoPay

Going forward, theres a big possibility for Gojek to utilize GoPay for universal cashless payment platform apart for their own services.

More information on this : https://id.techinasia.com/gojek-hadirkan-gocar-saingi-uber-dan-grabcar

5 minutes for Ecommerce Indonesia 2016

Last Friday in Le Meridien Hotel Jakarta, Indonesia Ecommerce Association held an event called 5 minutes for Ecommerce 2016. It was an open public seminar where stake holders in Indonesia e-commerce presents their views, concerns, and ideas on the state of this emerging industry going forward. ICT Minister Rudiantara was one of the speaker along with several other e-commerce scene pundits. One interesting point about this event was each speaker can only present in 5 minutes time with maximum 5 slides, a bit like pecha kucha.

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Below are three main interesting points ive noted by attending this event : Rudiantara’s 1000 startup plan, E-commerce Tax and the regulations for venture capital in Indonesia. Continue reading “5 minutes for Ecommerce Indonesia 2016”

2015 dalam album lokal

Salah satu pet peeves saya terkait musik adalah ketika mendengar opini bahwa musik Indonesia makin kesini makin tidak berkualitas. Biasanya juga diikuti dengan retorika jaman keemasan musik Indonesia di era Ahmad Dhani belum hangover akibat terlalu banyak meminum egonya sendiri.

Album Indonesia 2015

Come on man. Musik bagus, seperti halnya revolusi, akan susah ditemui di televisi. Channel youtube Sounds From The Corner bisa menjadi tempat yang bagus untuk memulai eksplorasi. Ada banyak musik lokal bagus di luar studio Dahsyat dan yang kamu butuhkan adalah mencari lebih dalam.

Berikut beberapa album lokal yang menjadi landmark eksplorasi musik Indonesia saya di tahun 2015. Continue reading “2015 dalam album lokal”

Beyond ride sharing ban: potential new regulations in Indonesia that may affect startups

The recent controversy of ride sharing apps prohibition has left a bitter taste for Indonesian startup ecosystem. Not only causing a huge uproar in social media, this move sparked immediate response from members of people representative council, former Indonesian VP Boediono up to president Jokowi himself. In less than 24 hour, Transport Minister Ignasius Jonan has been forced to revert this decision due to the amount of negative reaction from the public.

Jakarta-traffic

On one side, the backlash showed that ride sharing apps have started to become an integral part of society especially in Jakarta. A good progress considering how recent the services was introduced in this market (Gojek started in 2010 while GrabTaxi entered Indonesia just last year). On the other side, the controversy highlighted further one of the biggest challenge in this country startup scene : uncertain regulation.

So looking forward, are there any other regulatory development that Indonesian startup founder and investors should be cautious about ? Below are some of my observation. Continue reading “Beyond ride sharing ban: potential new regulations in Indonesia that may affect startups”

Why Ebook Is Not Disruptive (Yet)

One of my favorite strategy blog Stratechery recently has a great piece on ebooks. Apparently in 2015, the sales of physical books in the United States is still going strong while ebook fall down 10 percent. The market share of ebooks also did not grow very much, still steady at 20% for several years. The trend is even more disconcerting  due to the massive sales decline on ebook reader. Having single purpose device such as Kindle are apparently too cumbersome for general population. It is still too early to pull the verdict, but things are not going well for the state of electronic books.

Source: death to stock photos
Source: death to stock photos

This is very interesting because usually the emergence of the electronic media will disrupt the old establishment of physical ones. Case in point, the introduction of itunes and other digital music platform had brought CD sales to its knees. Disruptive Innovation as famously interpreted by Clayton Christensen. So why does this not happen with ebook ?. In the stratechery piece, there are three factors which held the adoption of ebooks: Price, Experience and Modularization.

Reflecting it to my experience as an avid book reader and the market condition in Indonesia, In this post, I will relate some of this drawback factors discussed in stratechery post to my personal experience. I will discuss some of the reasons which makes ebook worth to try and why physical books will still going to be around for the foreseeable future. Continue reading “Why Ebook Is Not Disruptive (Yet)”