32 Asian Legal Business | November 2024 digital financial technology), Modalku (P2P lending), OnlinePajak (online tax filing), and popular e-wallets such as OVO, GO-PAY, and DANA. According to data from Indonesia’s Minister of Communications and Informatics (KOMINFO) in December 2022, despite a 60 percent year-on-year drop in funding into Asia’s digital start-ups, transaction values in Indonesia’s fintech sector grew by 39 percent year-on-year. This represents the second-highest growth rate among G20 countries during the COVID-19 pandemic, underscoring the resilience and dynamism of Indonesia’s fintech ecosystem. “The rise of fintech in Indonesia has significantly disrupted traditional banking and financial services, prompting transformative shifts across the industry,” say Chandrawati Dewi, partner, and Meitiara Bakrie, senior associate at Jakarta-based law firm ABNR Counsellors at Law. One of the disruptors is the rapid growth of digital banks, which are banked by regional tech giants including Indonesia’s GoTo. Additionally, traditional lenders have long wanted to tap into the country’s vast unbanked or underbanked population with high mobile penetration. Consequently, many traditional banks have evolved into digital banks or have incorporated digital banking products to remain competitive. Indonesia Indeed, a notable trend in Indonesia’s robust fintech landscape features daring innovation of traditional banking, leading to digital transformation and partnerships between banks and fintech startups. In recent years, the largest ASEAN economy has witnessed substantial year-over-year increases in digital banking adoption, with the COVID-19 pandemic further boosting this trend. Looking ahead to the coming year, the country’s central bank Bank Indonesia anticipates a 23 percent surge in the value of digital banking transactions, projecting a total of $4.5 trillion. This growth is particularly impressive given how much competition there is in the fintech space now, with the sector seeing a rising number of innovative startup companies. These firms operate across various sectors, including payments, retail investments, lending, financial planning, crowdfunding, remittances, and financial research. Among the fast-growing Indonesian fintech companies are Ajaib (digital mutual funds), Kredivo (e-commerce and Banking on change Indonesia’s fintech revolution is transforming banking, with startups and traditional lenders driving innovation while navigating regulatory hurdles and global expansion. By Sarah Wong In the age of digitalisation, the fear of lagging behind in technology is what has kept traditional financial institutions up at night. But top lenders in Indonesia seem to have cracked the code, pioneering digitalisation of banking services at the forefront of the country’s fintech revolution. • Indonesia’s fintech sector thrives despite global funding challenges • Traditional banks partner with startups for digital transformation • Regulatory compliance crucial as fintech expands domestically and internationally
RkJQdWJsaXNoZXIy MjA0NzE4Mw==