The joint report of AC Ventures and BCG shows a significant enhancement of Indonesia‘s fintech players, which attained 600%, from 51 players in 2011 to 334 players in 2022.
Heaptalk, Jakarta — Indonesia‘s early-stage venture capital firm, AC Ventures (ACV), and Boston Consulting Group (BCG) released a report that demonstrated the growth of Indonesia’s fintech industry, namely Indonesia’s Fintech Industry is Ready to Rise.
In response to the launch of this report, AC Ventures‘ Founder and Managing Partner, Adrian Li, voiced. “The exponential rise in the financial technology players, burgeoning customer engagement, and escalating equity funding indicate the sector’s vast potential. Our investment strategy aligns with this space’s most impactful and innovative enterprises,”
With this joint report, Adrian affirmed AC Ventures would continue to sustain its support and investment record in the flourishing financial technology industry.
This report charts the progress of financial technology in the country across multiple sub-verticals from the inception of financial technology startups and the local digital economy in 2011 – 2022. The output highlights and reveals payments, lending, and wealth tech as the primary driving forces of Indonesia’s observable today’s financial technology ecosystem.
During the last decade, this report discloses Indonesia’s significant increase of up to six folds in the number of financial technology players, with the count rising from 51 players to 334 players during 2011- 2022. Initially, the growth was primarily boosted by the payment. However, the segment has been more dynamic as the report demonstrated that lending, payment, and wealth tech, becoming another driving factor of financial technology growth.
Furthermore, a similar report also reveals that new players in segments such as Software as a Service (SaaS) and insurance continue to emerge, which indicates the maturity of Indonesia’s financial technology industry to move toward more sophisticated products and services.
Fintech offerings also demonstrated a surge in customer engagement in the nation. The payments segment, which boasted over 60 million active users in 2020, is expected to have a compound annual growth rate (CAGR) of 20%+ until 2025.
The report noted more than 30 million active peer-to-peer lenders account in the lending segment in 2021. Meanwhile, the wealth segment had over 9 million retail investors in 2022. The adoption of Saas platforms is also developing, with 6 million SMEs currently using them, representing a twenty-six-fold expansion over the preceding three years.
An investment trend in the financial technology sector
According to this report, investment trends also echo the diversification of Indonesia’s financial technology market, with lending and payments no longer being the primary areas of interest. Even though lending and payment remain critical, the report finds an increasing investment in wealth tech, insurtech, and fintech SaaS.
The financial technology market is expanding rapidly, with emerging players alongside established actors. The report noted that early-stage funding deals receive over 80% of the total invested capital. The output indicates the funding record reached US$5.4 billion in 2020 – 2022, uplifting 2.7 times than 2017 – 2019. Growth and monetization are the principal focus of series D+ investment rounds.
Perceiving the current economic climate, most investors are today looking for clear paths to profitability before a Series D. Based on the report, more than 80% of accomplished fintech deals were for pre-series C funding rounds in 2020 – 2022, which indicates robust support for early innovation. These trends are forecasted to continue driving innovation and disrupting the existing financial services landscape.
“It is an exciting time for innovation led by customer needs, a collaboration between fintech players and traditional financial institutions, regulatory bodies, and regulatory foresight. We expect our insight will equip industry players with a deeper understanding of the fintech ecosystem and put them in a stronger position to seize new opportunities and gain competitive advantage,” The Managing Director and Partner at Boston Consulting Group, Sumit Kumar, said.
