Fintech Lending in Indonesia Remains Attractive for Investors

Penulis: Desy Setyowati

Editor: Safrezi Fitra

7/1/2019, 19.19 WIB stated funding to fintech rose to US$ 182.3 million in 2018. About 57 percent of them were fintech lending firms.

Telaah - Bisnis Fintech
Jakub Jirsak/123rf

Investment in fintech (financial technology) lending industry grew well last year. This industry is still a favourite for investors, even though its operations are subject to illegal business. Since December 2016, the Investment Alert Task Force has blocked 404 illegal fintech lending platforms.

In Fintech Report 2018, stated total funding to the fintech sector rose to US$ 182.3 million in 2018 from US$ 176.75 million in 2017. About 57 percent of them were related to the lending sub-sector. “Fintech lending business has a promising prospect,” Executive Chairman of the Indonesian Financial Technology Association (Aftech) Kuseryansyah told Katadata in Jakarta, Wednesday (1/2).

Positive prospects for fintech lending business can be seen from the large financing needs in Indonesia. Based on data from the Financial Services Authority (OJK), funding needs for Micro, Small and Medium Enterprises (MSMEs) reached Rp 1,700 trillion, while banks were only able to finance Rp 700 trillion.

Pertumbuhan Investasi Bisnis Digital
(Dailysocial Annual Startup Report)

This optimism is evident from the large number of investments in the fintech lending sector. According to, eight fintech lending firms have received additional capital since December 2017. First, DANAdidik with seed funding worth US$ 1 million from Plug and Play Indonesia in December 2017.

Second, Modalku with Series B funding worth US$ 25 million from Softbank Ventures and other existing investors in April 2018. Third, Cicil with Series A funding worth US$ 5 million from East Ventures and others in August 2018. Fourth, Koinworks with Series A funding worth US$ 15 million from Mandiri Capital Indonesia, Gunung Sewu, and Convergence Ventures in August 2018.

Fifth, Akulaku with Series C funding worth US$ 70 million from Fanpujinke Group, BlueSky Venture Capital, and Qiming Venture Capital in October 2018. Sixth, Awan Tunai with Series A funding worth US$ 4.3 million from Global Brains and Venox Venture Capital in October 2018.

Seventh, Investree with Series B funding from SBI Holdings, Mandiri Capital Indonesia, Persada Capital, and others in July 2018. Eighth, Kredivo with Series B funding worth US$ 30 million from Square Peg Capital, MEI Ventures, and others in July 2018.

Up to now, 78 fintech lending firms have been registered with OJK. They had channelled Rp 16 trillion in loans to 2.8 million borrowers from December 2016 to October 2018. This loan almost reached OJK’s target of Rp 20 trillion by the end of 2018.

According to the OJK’s Fintech Licensing and Supervision Director Hendrikus Passagi, Fintech lending in Indonesia is needed by those who do not have a bank account (unbanked) and who have an account, but need fast funds (underserve). “No wonder the growth is rapid,” he said recently.

Penduduk yang Tak Punya Akun Bank
(OJK, processed)

The fintech lending business is indeed attractive. Aside from having a large market potential, the ratio of non-performing loans (NPL) in this sector can be considered low. Fintech lending’s NPL on a monthly basis was around 1 percent as of November 2018. The amount of the NPL was still lower than banks, amounting to 2.6 percent (gross) and 1.2 percent (net) as of October 2018.

The size of the fintech lending market in Indonesia is also undeniable. Special Staff to the Minister of Communications and Information Lis Lestari Sutjiati said the conventional financial industry is only able to reach 59 percent of Indonesia’s population, even though the government expects the financial inclusion to reach 75 percent by 2019. “There is still a gap of 16 percent or 35 million people who can be served by fintech,” Lis said.

Based on OJK data, the number of Fintech borrower accounts in January 2018 was 330,000 accounts, which then soared almost seven times to 2.3 million accounts at the end of September. It consists of borrowers from Java (1.97 million accounts or 85 percent of total accounts) and borrowers from outside Java (the rest of it).

The accumulated loan value of Fintech Peer-to-peer (P2P) Lending until the end of 2018 was Rp 13.83 trillion, soaring more than four times from Rp 3 trillion in January. Up to now, fintech loans are very liquid, where performing loans (up to 30 days) reached 96.73 percent, low-performing loans (30-90 days) 2.07 percent, and non-performing loans (> 90 days) 1.2 percent.

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