February 29, 2024

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Indonesia’s Fintech Sectors Experience Rapid Growth from E-Money Services

In Indonesia, e-money is becoming a more popular method of payment. Credit and debit cards continue to account for the lion’s share of retail electronic transactions in terms of value, accounting for 82% of total value in 2019. However, in terms of the number of transactions, e-money has eclipsed credit and debit cards in recent years, accounting for 84% of total retail economic transactions in the same period.

Low transaction costs, the rapid expansion of the digital economy, and a large population of unbanked individuals are among the key drivers of growth in e-money usage. The primary driver on the supply side is lower transaction costs, which are passed on to users through discounts and promotions. Meanwhile, the rapidly expanding digital economy has resulted in an increase in demand for digital payments. Furthermore, the growth of e-money in Indonesia is aided by the country’s low rate of bank penetration. Because of its contactless nature, the COVID-19 outbreak has recently increased the popularity of e-money.

With this announcement, Indonesia’s fintech start-up has announced that it has obtained an e-money licence from the country’s central bank, Bank Indonesia, paving the way for the launch of its e-money service in the country. The central bank granted the e-money licence to a subsidiary of the holding company formed after the Indonesian start-up company invested in its Singaporean counterpart earlier this year, according to the announcement.

The fintech firm is one of the largest financial service platforms to receive the e-money licence, which is a lucrative licence held by top fintech players and large banks in the country. The licence is valid for five years and can be extended for another five. The fintech company intends to use the licence to expand the number of use cases that its agents can facilitate, particularly to assist global merchant clients in collecting payments from the unbanked.

As of May, the company’s financial group has processed nearly $10 billion through its ecosystem of products and with the e-money licence expects this volume to grow further. “Now with an e-money licence, we are expecting that this advancement would move us closer to our goal of becoming a full-stack financial service platform for unbanked people”, said the CEO and co-founder of the fintech start-up company.

OpenGov Asia reported that the rising digital payments transactions reflect the evolving digital financial literacy of the Indonesian population. It also demonstrates the increasing acceptance of fintech and e-commerce services in the country. BI foresees that the uptake of digital transactions will continue with e-commerce and e-payments growing by 33.2% and 32.3%, respectively in 2021.

As more e-wallet players transition to multi-line businesses to provide financial services, the industry must strengthen interlinkages among providers to provide a more seamless experience for customers.

In contrast, banks should incorporate the open banking era by adding more application programming interfaces (APIs) that e-payment players, Fintechs, and other digital platforms can easily access. Banks will be able to create a comprehensive payment ecosystem, tap into the existing ecosystem, and broaden access and market to offer their services by utilising API. Over time, it is expected that the use of digital banking and even e-wallets will significantly contribute to economic development and the abolition of poverty in the country.

Some of the most significant regulatory challenges confronting Indonesian e-money issuers. Limits on e-money balances and monthly transaction value have been cited as a barrier to growth by e-money issuers. Another regulatory challenge is the industry’s restriction on foreign ownership, which can deprive e-money issuers of foreign know-how and funding on a larger scale than is currently available. Moreover, e-money issuers must continue to invest in technological advancements to combat fraud and other cyber risks.

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Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

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CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

Since 1972, CTC has established itself as one of the country’s top IT solutions providers. With 50 years of experience, headed by an experienced management team and staffed by over 200 qualified IT professionals, we support organizations with integrated IT solutions expertise in Autonomous IT, Cyber Security, Digital Transformation, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

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Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

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SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

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HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

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IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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