Global Investors Bullish on Indonesian FinTech StartUps

Indonesian FinTech startups have attracted global venture capital
giants, such as the Japan-based venture capital firm CyberAgent
Ventures. Earlier this month, the firm announced that more than half of
their new US$50 million fund will be dedicated to Indonesian startups.

The VC fund will most likely focus on bitcoin startups like Blossom that
utilizes an innovative technology such as the blockchain to solve
problems of locals that the banks cannot. For example, Blossom attracts
global investors to fund small business in Indonesia that are ready to
launch. Twelve months later, the profits of the funded business will be
distributed to the investors, with an additional 7.5 % of return.

According to the World Bank inclusion Data published in 2014, the
percentage of Indonesians above 15 years of age with a bank or a
financial account stood at about 36%, which was substantially lower than
most countries in East Asia and the Pacific.

Indonesia"s low bank account and credit card penetration rate lies in
banks failures to understand the financial problems that the majority of
the country"s population suffers from. Not only in Indonesia, but in
most countries, banks require a list of qualifications and documents in
order for a person to apply for a bank account or a credit card, which
often is hard to obtain for people with low income, or those wanting to
send or receive small payments.

By recognizing such problems, FinTech startups in Indonesia have
developed faster, cheaper and more secure ways to transfer money around
the country and across the globe -- as well as alternative ways to pay
online, especially at e-commerce stores -- without undergoing the
complicated process of setting up credit cards and paying high
transaction fees.

Mohit Mehrotra, an executive director at Deloitte Consulting, told local
media:

"Asia has a huge potential for FinTechs. Countries like India and
Indonesia, with their low financial services penetration and large
unbanked and underserved populations, are perfect breeding grounds with
several white spaces for FinTechs to play an important role."

Cheap and secure methods of transaction settlements developed by FinTech
startups, that could be easily availed by the unbanked, have aroused the
interests of large financial institutions. Mehrotra stated, "Big banks,
by nature of their legacy set-ups, find it increasingly difficult for
forging new digital-enabled business models that FinTechs specialise in."