o Southeast Asia’s largest economy is now home to seven digital banks, with seven more waiting for licences
o The country’s large, young and relatively unbanked population gives the sector great growth potential, though low financial literacy may be a challenge
Competition in the digital banking sector in Indonesia is heating up as well-resourced technology companies muscle into the scene, capturing a chunk of the market share from large but typically rigid traditional banks.
Among the digital banks that are already up and running is Bank Jago, which is backed by Gojek. The Indonesian tech giant holds 22.16 per cent of the bank’s shares after purchasing around US$155 million worth of the bank’s shares last year.
Japanese tech platform Line has partnered the Indonesian subsidiary of South Korea’s Hana Bank to launch a digital banking platform, while Singapore-based Sea Group, Southeast Asia’s most valuable tech company, in January acquired Bank BKE for an undisclosed amount to transform it into a digital bank. Sea has also been granted a digital banking licence in Singapore.
Southeast Asia’s largest economy is now home to seven digital banks, with seven more waiting for licences from the Financial Services Authority (OJK). These digital banks are either operated by small banks after they were acquired by tech companies, or they are offerings from existing banks.
Either way, they are set to ride the wave of digital transactions in Indonesia, boosted by rising levels of internet penetration and digital literacy as well as a growing appetite for online and mobile transactions – particularly among the 145 million millennials and members of Generation Z who account for more than half of the country’s total population.
Source: South China Morning Post
Author: Resty Woro Yuniar
Original published date: 15 July, 2021
July 22, 2021
