Having grown by 6x in 10 years, payments, lending, and wealthtech are now the driving forces in the country’s fintech ecosystem

In a recently released report on Indonesia’s fintech industry landscape, a six-fold increase was noted in the number of fintech players there, with the count rising from 51 in 2011 to 334 in 2022. The growth, initially mainly driven by the payments segment, has become more diverse and dynamic, comprising additional services such as lending and wealthtech.

Additionally, new players in financial Software-as-a-Service (SaaS) and insurance activities have been emerging, indicating that the fintech industry there is maturing and moving toward more sophisticated products and services. Some 6m small- and medium- sized enterprises in Indonesia have adopted SaaS platforms, representing a 26-fold expansion over the preceding three years.

According to the data, fintech offerings in Indonesia are also experiencing a surge in customer engagement. The payments segment, which boasted over 60m active users in 2020, is expected to have a compound annual growth rate of 20%+ until 2025. In the lending space, there were more than 30m active peer-to-peer borrower accounts in 2021. Meanwhile, the wealth segment had over 9m retail investors as of 2022.

Bullish sentiments

Investment trends also echo the diversification of Indonesia’s fintech market, with lending and payments no longer being the primary areas of interest. While they remain important, increasing investments into wealthtech, insurtech, and fintech SaaS have been noted.

The fintech market is expanding rapidly, with emerging players alongside established ones. Equity has been targeted based on an operator’s or vertical’s maturity. Early-stage funding deals have been receiving over 80% of the total invested capital. Funding from 2020 to 2022 reached US$5.4bn — 2.7 times more than the period from 2017–2019.

According to Adrian Li, Founder and Managing Partner, AC Ventures, which compiled the report with Boston Consulting Group (BCG), said: “The exponential rise in the number of fintech players; burgeoning customer engagement; and escalating equity funding, are all indicative of the sector’s vast potential.”

BCG’s Managing Director and Partner, Sumit Kumar, said: “It’s an exciting time for innovation led by customer needs, collaboration between fintech players and traditional financial institutions, regulatory bodies, and regulatory foresight.”