The growth of digital payment usage is reflected in the increase in the Entrepreneurship and Productivity pillarscore in EV-DCI 2021. The driver behind the growth is the increase in volume and overall total sum oftransactions using e-money between the 20 provinces.

Bank Indonesia has issued a regulation to standardize QR-code in Indonesia. The policy is part of the Indonesian Payment System (SPI) 2025 vision, which include:

  • Integration of national digital economy and finance
  • Digitalization of banks
  • Interlink between fintech and banks
  • Innovation with focus on consumer protection, integrity and stability, and fair competition
  • National interest in international digital economy-finance

The number of users in payment gateways provided by Xendit grew by 540% in 2020. Xendit has processed more than 65 million transactions with total value of US$ 6.5 billion annually.

“The main strength of digital payments in Indonesia is the innovative nature of the industry and its adaptive consumers.”

Head of Payment System Policy Department
Bank Indonesia
Filianingsih Hendarta

The COVID-19 pandemic has seen an increase in electronic money transactions and digital banking activities, and this momentum has encouraged Bank Indonesia to accelerate digital transformation. “The digitalization initiative is accelerated so that it can meet the increasingly customer-centric needs,” said FilianingsihHendarta, Head of Bank Indonesia’s Payment System Policy Department. Filianingsih, who is also the Deputy Governor of Bank Indonesia, is a Faculty of Law graduate from Airlangga University and received her MBA in finance from Boston University.

“One of the challenges in maintaining sustainable business growth is creating synergies between digital businesses and financial service providers.”

President Director
PT Bank Mandiri Tbk.
Darmawan Junaidi

The flourishing of fintech in recent years has raised concerns amongst banks. More and more payment and financial services are implemented by fintech, so it is inevitable that banks are facing challenges and increasingly fierce competition. “One of the challenges in maintaining sustainable business growth is creating synergies between digital businesses and financial service providers,” said Darmawan Junaidi, President Director of PT Bank Mandiri Tbk for 2020-2025. This is why collaboration is more pivotal than ever.

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The increase in the EV-DCI index score for the Entrepreneurship pillar, which rose by 5.10 points, illustrates the increased use of digital services to start businesses throughout Indonesia. The low competitiveness score of the Entrepreneurship pillar (13.46)  indicates a rapid growth potential for the digital-based lending business.

OJK Chief Executive of Finance Industry Non-Bank Supervisor, Riswinandi, said the OJK has two options to fully support MSME funding:

  • Encourage fintech lending to increase productive capacity (Quality)
  • Encourage easier registration for productive fintech lending on a massive scale (Quantity)

During the pandemic, Koinworks stated that the loan demand from SMEs has increased by 32% with a total of more than 30, 000 loan requests throughout 2020. The number of KoinWorks users has also increased by 61%, reaching 549,000 users by the end of 2020. After the large-scale social restrictions (PSBB) easing, KoinWorks successfully distributed loans amounting to about IDR 300 million (IDR) every month.

“Fintech is able to support economic recovery, as it has helped both individuals and SMEs make transactions.”

Head of Digital Financial Innovation Group
Financial Services Authority (OJK)
Triyono Gani

Collaboration between banks and fintechs is an important agenda for the Financial Services Authority (OJK) as it brings about digital financial innovation amidst the Covid-19 pandemic. Simultaneously, the public also needs to be prepared for digitalization. “Financial literacy that is combined with digital literacy is an important asset for society to face the digitalization of the financial services sector,” said OJK Head of the Digital Financial Innovation Group (GIKD) Department Triyono Gani. Triyono, who oversees the development of digital financial innovations, earned his bachelor’s degree in Business Administration from Diponegoro University and a master’s degree from the University of Bristol, England.

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During the pandemic, more people used digital services to begin and maintain investing in the stock market. There was a large spike in the amount of retail investors in 2020, exemplifying growth in financial inclusion. This trend is exemplified by one of the indicators in the ICT Utilization pillar.  The ratio of the population that accessed the internet from home increased significantly, moving up from 65.04 to 81.23.

Currently, there are 59 online mutual fund investment applications and websites registered with the OJK.

Bibit, a mutual fund investment application that is part of Stockbit, recorded its stellar growth of 1 million single investor identifications throughout 2020. By focusing on education and making investing easy, Bibit has been the most popular application for millennials to access the financial market in Indonesia. Around 90 percent of Bibit users are millennial investors.

“We can see young people gain tremendous benefit because of the exponential rise in the stock market. However, we also have to see that, in the future, the market will always change. Therefore, it is important for me to educate them that investing in the capital market is long-term.”

Indonesia Stock Exchange (IDX)
Pandu Patria Sjahrir

The Covid-19 pandemic has provided momentum for the economic growth and digital investment vertical in Indonesia. Digital services and the increasing demand have pushed technology companies to improve their performances in the capital market. In order to learn about the prospects of digital companies and the future trends of digital economy investment from the investor’s point of view, the EV-DCI team interviewed Indonesian Stock Exchange Commissioner Pandu Patria Sjahrir virtually. Graduating from Stanford Graduate School of Business with a master’s degree, he is also the President Commissioner of SEA Group Indonesia and a member of Gojek’s Board of Commissioners.

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