Fintech Report 2016

• In the last two decades, Indonesia’s financial industry has shifted due to the fast technology growth and development. • From traditional financial system (bank driven), to the

financial technology (consumer driven), it enables more players to emerge in Indonesia financial sector.

While there is no clear definition about fintech, Bank Indonesia defines it as: “A phenomenon of fusion between technology and financial features that transform business models and a weak barrier to entry which lead to raises unregulated players to run the service as well as regulated financial institutions.”

•

Indonesia’s Fintech Association (IFA), established in 2015, was able to map more than 120 fintech players as of today.

•

Indonesia Financial Service Authority is expected to release a new regulation (POJK) specifically for off balance sheet (marketplace) lending by December this year. On the other hand, Central Bank (BI) has launched BI Regulation on Payments Transaction Processing (PBI PTP) this early November to provide legal assurance for new and existing FinTech payments business activities. They also has created a FinTech Office that is aimed to encourage innovation to local FinTech startups by virtue of, among others, capacity building and the implementation of regulatory sandbox.

This report is a curated and an aggregated information on Indonesia’s Fintech scene in

2016, designed to help both local and foreign entities to obtain better understanding on local fintech landscape.

• This report consists of three segments: – In collaboration with the Indonesia’s Fintech Association, we

curate and aggregate the information about local fintech players and their respected area in Indonesia. This informations are only focusing on a non-bank and non-telco

companies.

– Survey added, in collaboration with JakPat, we are seeking for awareness of fintech services using 1000 respondents. – DailySocial and Indonesia’s Fintech Association analyze and validate conclusions of this survey.

CONTENT • Market Overview • Indonesia’s Fintech Landscape • Investment Landscape • Consumer Awareness • Indonesia Fintech

Challenge • Conclusion

GENERAL MARKET OVERVIEW • As the world’s fourth most populous nation and the largest economy in Southeast Asia, Indonesia has charted an impressive economic growth since overcoming the Asian

financial crisis in the late 1990s. • The country’s gross national income per capita has steadily risen from $560 in the year 2000 to $3,374 in 2015. The GDP in 2015 has reached 861.934 billion USD. Source: World Bank and BCG

GENERAL MARKET OVERVIEW • Boston Consulting Group (BCG) in 2013 has predicted that middle-class and affluent consumer (MAC) socioeconomic category will begin to ramp up their spending in key segments

such as home goods, vehicles, consumer durables, and financial services. • They said the number of MAC will be doubled by 2020, from 74

million in 2013 to roughly 141 million people. During that period, some 8-9 million people will enter the middle class each year. Source: World Bank and BCG

INTERNET & MOBILE MARKET • Today, the number of internet users in Indonesia has exceeded over 100 million (APJII: 132.7 million).

– 51.8% are male and 48.2% are female – 65% internet users are from Java Island – 24 million Internet users are in 25-29 age range • 326.3 million mobile subscription (126% population) Source: APJII, Google, We Are Social

-41%

28% Desktop & Laptop

DEVICE USED In 2016, the share of web page views from Desktop & Laptop only reach 28%. Year-on-year it’s decreasing by 41%.

70%

+41% Mobile Phone

While Share of web page views from Mobile Phone reach 70%.

Year-on-year it’s increasing up till 41%. 3% -37%

When in come to tablet, share of web page views only reach 3%.

Tablet

Year-on-year it’s decreasing by 31%. Source: We Are Social

AVERAGE TIME SPENT •

By time spent, Indonesia’s people still spend a lot of time on PC or Tablet. Average daily use of the internet via PC or Tablet is 4 hours and 42 minutes.

•

For Mobile Phone, the average daily use of the internet is 3 hours and 33 minutes.

•

As for Social Media, the average daily use is 2 hours and 51 minutes and lastly, for Television is 2 hours and 22 minutes. 4.42 3.33 2.51

PC or Tablet

Mobile Phone

Social Media via Any Devices

2.22

Television

Source: We Are Social

FINTECH MARKET

Source: OJK , World Bank, BI

•

Only 36% adults in Indonesia have an account at the formal financial institution.

•

The penetration of bank branches per 100K population is only 1/6 of the penetration in European countries.

•

49 million SMEs unit not yet bankable.

•

There are Rp 988 trillion gap financing the development.

•

P2P lending is still under Rp 150 billion.

•

The share of new credit to GDP is still 34.77% (bank). It reflects a huge market potential that can be targeted by fintech (P2P lending), without having to erode banks’ market share.

FINTECH MARKET (2) • 50% people send remittances through banks. • 44% people borrow money from friends & family members. • 27% people save money in their bank account. • 9% people use credit cards for payments. Source: Indonesia’s Fintech Association

FINTECH IS NOT A NEW PHENOMENON Source: New York Times & Arner, BI

FINTECH IN INDONESIA Joint Venture

Conventiona

Fintech 2.0

l Financial Institutions

Fintech 2.5

[Bank]

•

Financial

Independent

Fintech

Institutions & Tech

Company

3.0

technology company [Startup]

Indonesia’s fintech today are growing to fintech 3.0, where many independent tech companies (startup) joining the financial market.

•

Because many new players are emerging, Indonesia’s Fintech Association then established in September 2015.

•

The vision is to be a reliable partner to realize Indonesia’s fintech ecosystem, from Indonesia companies for Indonesia people.

FINTECH PLAYER GROWTH •

With the fast pace development of Indonesia’s tech ecosystem, fintech sector also feel the impact and 2015-2016 was the best year for fintech industry’s growth in

78%

Indonesia so far. •

According to Indonesia’s Fintech Association, the growth of fintech players detected for the past two years reach 78%, the highest number so far

7%

6%

2006-2010

2011-2012

9%

2013-2014

2015-2016

Source: Indonesia’s Fintech Association

NUMBER OF FINTECH PLAYERS IN INDONESIA

135-140

55

• By November 2016, Indonesia Fintech Association (IFA) has listed Around 135-140 fintech players.

• By November 2016, there are 55 fintech players

registered as a full member of the association. • 41 fintech 3.0 and 14 fintech 2.0

Source: Indonesia’s Fintech

FINTECH PLAYER PROFILE BY SECTOR • Based on IFA data, Others 11%

43% of the fintech players in Indonesia are playing in

Crowdfunding 8%

payment sector, from mobile payment to payment gateway company.

• E-commerce growth plays major part for this condition

Personal Finance Planning 8%

Payment 43%

Lending 17% Agregator 13%

Source: Indonesia’s Fintech Association

INDONESIA FINTECH PLAYER Source: Indonesia’s Fintech Association, Crunchbase, DailySocial, Tech in Asia

Group

Indonesia Fintech Player

Account Aggregator

Veryfund

Agent Network

Ruma

Asset Management

Fidigo

Banking Support

Kanopi

Capital Market

Stockbit

INDONESIA FINTECH PLAYER Source: Indonesia’s Fintech Association, Crunchbase, DailySocial, Tech in Asia

INDONESIA FINTECH PLAYER Source: Indonesia’s Fintech Association, Crunchbase, DailySocial, Tech in Asia

Group

Payment

Indonesia Fintech Player

INDONESIA FINTECH PLAYER Source: Indonesia’s Fintech Association, Crunchbase, DailySocial, Tech in Asia

FINTECH INVESTMENT OVERVIEW •

In 2016, many fintech startups emerged in Indonesia. The growth reaches 78% per IFA data.

•

Approximately 12 local capital owners invested in fintech startups and it includes funding to fintech startup outside Indonesia.

•

On the other side, approximately 20 foreign investor firms invested to fintech startup companies, either local or foreign startup which want to expand its market.

•

Furthermore, we listed 4 angel investors invested to local fintech startup and one IPO funding.

DISCLOSED AMOUNT OF FUNDING • While most startups and capital owners choose not to disclose the number, we found out that the total disclosed amount of funding in 2016 for fintech startups has reached around Rp 486.3 billion. • The investment number include IPO funding and funding from parent company outside Indonesia.

FINTECH STARTUP FUNDING LIST (1) Source: Crunchbase, DailySocial, Tech in Asia

FINTECH STARTUP FUNDING LIST (2) Source: Crunchbase, DailySocial, Tech in Asia

Startup

Series

Capital

Investor

Series A

Rp25,8 Billion

Local: East Ventures, Convergence Ventures Foreigner: Wavemaker Partners, Northstar Group

Seed

Undisclosed

Local: East Ventures Foreigner: 500 Startups

Seed

Undisclosed

Local: East Ventures Foreigner:

Series A

Rp100 Billion

Local: Alpha JWC Ventures Foreigner: Sequoia India, Harvard

Undisclosed

Rp201,6 Billion

Local: Foreigner: European Funds

Others

Expand to ID: 2016

Fund went to Funding Societies; parent company Modalku

FINTECH STARTUP FUNDING LIST (3) Source: Crunchbase, DailySocial, Tech in Asia

FINTECH STARTUP FUNDING LIST (4) Source: Crunchbase, DailySocial, Tech in Asia

LIST OF LOCAL INVESTOR 8 With eight investment activities in 2016, East Ventures is the most active local

venture capital who pour funds into fintech startups in Indonesia.

2 1

1

1

1

1

2

LIST OF FOREIGN INVESTOR

On the other side, 500 Startups is the most active foreign VCin Indonesia’s fintech ecosystem, with 3 investments this year. The portfolio are: iGrow, finAccel (Kredivo), and Kudo.

The others VCs: Jungle Ventures, Wavemaker Partners, Northstar Group, Sequoia India, European Funds, Beenos Plaza, Singapore Press Holdings, IMJ Investment Partners, Fenox Venture Capital, Golden Gate Ventures, Telstra Ventures, Jasrag Investments, Altitude Partners, Captii Ventures, Monk’s Hill Ventures, Perle Ventures, tryb Capital, Aura Funds Management, 2W Group,

Azmi Global, Quest Ventures

INVESTMENT TO FOREIGN FINTECH STARTUP INVOLVING LOCAL INVESTOR Local Investor

Others

Startup

Series

Capital

Undisclosed

Undisclosed

Omise

Seri B

$17,5 Million

Jirnexu

Seri A

$3 Million

Call Levels

Seed

Undisclosed

GMO Investment Partners Jepang, MDI Ventures

Wavemaker Partners, & Co-Founder Red Dot Payment Skype Toivo Annus

SMDV

SBI Investment, Golden Gate Ventures, Ascend Money

Nullabor, Anfield Equities, NTT Celebes Capital

DOCOMO Ventures, Tuas Capital Partners, Steve Melhuish, DMP VC

Lippo Group

-

Source: Crunchbase, DailySocial, Tech in Asia

ANGEL / INDIVIDUAL INVOLVED IN INDONESIA’S FINTECH STARTUP INVESTMENT ROUND

• Amar Goel: Chairman of the Board of Directors at PubMatic • Jerry Yeu: Investment Director at Hawksburn Capital • Mathieu Harding: Director at Hawksburn Capital • Prashant Kirtane: Vice President (Asia) at HomeAway

NO LOCAL ANGEL THIS YEAR Unfortunately, no (disclosed) local angel investors involved in fintech sector this year. In 2015, we recognized ANGIN (Angel Investor Club) had made investment into two fintech players, Taralite and Kitabisa.

POOLED FUND IN 2016 Investor Name

Capital

Kejora Group

Rp 1,08 Trillion

500 Startup SEA

Rp 650 Billion

KK Fund

Rp 5,2 - Rp6,5 Billion / startup [$400-$500,000]

Gobi Partner & MAVCAP

Rp 188,5 Billion

MDI Ventures

Rp 300 Billion

Mandiri Capital

Rp 200 Billion

Unitus Impact

Rp 600 Billion

Golden Gate Ventures

Rp 800 Billion

CONSUMER AWARENESS SURVEY

ON FINTECH • To have better understanding on consumer awareness on fintech, we’ve conducted a survey using the JakPat

platform. • 1000 respondents are involved, with 51.05% are Female and 48.95% are Male.

RESPONDENTS RESIDENCY East Java 20.31% Jakarta 35.08%

Central Java 15.91%

West Java 28.70% 85.18% respondents lives in Java

> 45 y/o 0.20%

RESPONDENTS

AGE From Age point of

40-45 y/o 2.90%

4 y/o Companies

Younger company have greater need for Data and

67%

3 y/o Companies

Analytics talents, but companies that have been operational for

0-2 y/o Companies

83%

longer duration have greater need in Risk Management talents. Source: Deloitte Survey 2016

Risk Management

Back end Programming

Data and Analytics

• While in 2016 Indonesia experience fast growth of fintech ecosystem, there’s a challenge in the regulation.

• Most fintech players feel that the regulation in Indonesia still in grey area. They’ve requested the authorities to create clearer regulation. What this sector needed most is Payment Gateway. • The authorities responded well. OJK will launch POJK which will be focusing on regulating the fintech payment and lending sector. BI already launch two initiatives, BI-Fintech Office and PBI PTP.

• At least 19 investment activities in fintech sector in Indonesia • East Ventures is the most active local ventures in fintech area. 500 Startups is the most active for foreign VC. • Total amount of disclosed investment in 2016 reaches Rp 486.3 billion.

• Consumer awareness to fintech services is still low although most live in urban area. • Yet most of them believe that fintech can help to push on better

financial literacy and financial inclusion in Indonesia. • Doku is the most popular fintech startup in Indonesia, according to respondents.

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