A journey on how fintechs, banks and telcos can advance Indonesia’s digital landscape

Indonesia presents a fascinating tapestry of financial progress and innovation woven by Fintechs, Banks, and Telcos.  

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Indonesia’s fintech sector has significantly evolved over the past decade, diversifying and improving its various payment domains, such as;  

  • E-wallets  

Independent fintech players like GoPay and OVO’s decision to offer e-money in e-wallets represent why the fintech sector continues to dominate in digitising cash transactions against its banking and telco counterparts.  

  • Mobile POS  

By aggregating payment terminals into one terminal, these products present a cheaper alternative to traditional POS systems for ‘warungs’ (small family-owned businesses) in Indonesia.

Moving beyond payments with lending

The earliest players in this field were conventional Indonesian Banks. In 2005, Bank Danamon, BTPN, and Bank Mandiri launched their respective micro-loan initiatives to attain this newfound market. Yet, one challenge stood in the way for Indonesia’s banks.  

All of their programs were delivered physically and operated through conventional branch networks. This made them expensive, as they relied on frequent customer visits. However, early on, these banks’ high profit margins had become an inspiring tale for the new wave of Indonesia’s fintechs.

Fast forward to 2023, and over 100 registered fintech leaders are transforming the lending landscape. While fintech lenders continue to compete with commercial banks in the SME space, their success in lending stems primarily from the unbanked and micro-segments where competition is scarce.  

One key feature of Fintech loans is the short loan tenure. Lasting around 90 days, these loans do not require collateral, incentivising high customer engagement. Although, it should be noted their interest rates are kept higher than those offered by banks. To counteract this, fintech lenders were primarily funded by individuals and non-bank institutions. This helped fintechs manage themselves during their early phases of development.

However, during the pandemic, fintechs found themselves in a tight spot. This is where banks stepped in for the fintechs, becoming their major funders. The cost of funds for traditional banks was lower than that for Fintechs. Hence, the overall unit economics worked better for banks.  

Global investments received by fintechs in 2023

  • Kredivo secured a USD 270 million investment led by Japan’s Mizuho Bank
  • Investree raised ~USD 231 million in Series D Funding led by Qatar’s JTA International Holdings
  • Amartha raised USD 25 million in debt funding from IFC and USD 100 million from Community Investment Management, a San Francisco based investment firm


The Indonesian financial sector witnessed the entry of two types of digital banks.

  1. Digital banks owned by conventional banks  
  • Bank Raya (owned by BRI)
  • hibank (formerly Bank Mayora, acquired by BNI)
  • BCA Digital (owned by BCA)  
  1. Stand-alone digital bank owned by fintechs and tech companies  
  • Bank Jago (where GoTo has a significant minority stake)
  • Superbank (with Emtek, Grab and Singtel as shareholders)  
  • Allobank (with the Chairul Tanjung group, Grab, Carro, IndoLife and Traveloka as shareholders). 

Over the last few years, banks have focused on launching new innovative services for the youth and underserved segments. Moving forward, banks should aim to employ innovative solutions that expand beyond these segments.

Future innovations  

  1. Credit Access for BoP (Bottom of the Pyramid) and SMEs
    Banks’ untapped potential now resides in providing credit access to BoP and SMEs in Tier 2 and Tier 3 areas. This presents a significant opportunity for future growth, especially in catering to these segments’ short to medium-term financing needs.
  2. Insurance Expansion
    Insurance expansion remains in single digits despite the efforts made by banks. However, with increasing access to credit, there is a growing demand for traditional and innovative insurance services.  
  3. Islamic Financial Product Innovations
    As Southeast Asia’s largest market, Indonesia is a potential hub for Middle Eastern economies looking to branch out, especially in pioneering innovations in Islamic or Sharia financial products. Leveraging the abundant talent pool and the domestic market dynamics, this can become the next game-changer for Indonesian financial service players, particularly traditional banks, provided they can effectively tap into and monetise this unique opportunity.


As banks and new-age fintechs assert their dominance, the role of telcos may seem uncertain. Despite being pioneers of payment innovations such as T-Cash’s “LinkAja” e-wallet app, their innovation trajectory has stagnated. Fortunately, telcos still retain a considerable advantage due to their extensive distribution networks and retail touchpoints.  

This advantage provides telcos with 2 potential approaches to consider:

  1. Focus on physical distribution
    Unlike traditional banks, which lack an entrenched presence in Tier 2 and Tier 3 islands or fintechs, which lack the necessary physical outreach, telcos’ unique strength in their formal and informal retail networks across diverse presents a significant differentiator in the next Fintech battle. This enables telcos to capitalise on the situation, expand their capabilities and introduce innovative fintech services (potentially through partnerships) at low unit economics. A notable success story is Maya Bank by PLDT in the Philippines.
  2. Superapp transition  
    Leveraging consumer habits and preferences, telcos stand poised to monetise data for their services. While respecting data privacy constraints, crafting a focused superapp could redefine the game. Success here requires a clear understanding of consumer segments and a precisely defined value proposition. Advanced data analytics and Consumer Data Platform capabilities will be crucial for telcos in this transition. A notable success story is Globe in the Philippines with its innovative superapp, GCash.

The final word  

The Indonesian fintech landscape is poised at a fascinating juncture, with the unfolding developments anticipated to shape its trajectory over the next few years. While traditional banks wield influence, the agility of emerging fintech players in embracing innovation is noteworthy. Traditionally perceived as slower in this space, telcos now face the imperative to innovate swiftly, driven by the immense opportunities at stake. As the narrative unfolds, the intricate interplay between established banks, agile fintech startups, and the evolving strategies of telcos will undoubtedly chart the course for the future of Indonesia’s financial technology landscape.