Indonesia's fintech market is small, but Australia wants in
Demand for a slice of the Indonesian market is coming from China as well as Australia.
Indonesia and Australia’s corporate watchdogs have deepened ties, aimed at promoting fintech.
Australia’s financial services regulator, ASIC, has signed a cooperation agreement with its Indonesian counterpart, OJK, aimed at promoting innovation in finance, including fintech.
The agreement is non-binding and mostly concerns sharing information, particularly on regulation and market trends.
“Indonesia is our nearest neighbour, and the largest economy in SE Asia,” a spokesperson for ASIC told AltFi.
“Australian fintechs could bring greater access to financial services to Indonesia's population where an estimated 44% do not have access to financial services.”
ASIC has signed similar fintech agreements with other international regulators, including the Monetary Authority of Singapore, the UK’s Financial Conduct Authority and the Ontario Securities Commission in Canada.
Several other cooperation agreements are currently being negotiated.
“Fintechs are often global, or have global aspirations, so for regulators, staying connected, and working together is essential in ensuring we enable innovation,” the spokesperson said.
“A better informed and more internationally connected regulator is better for all Australian fintechs. It means we at ASIC are up to date with regulatory and industry changes and developments in fintech.”
While Indonesia has a significantly larger population than Australia, its GDP and fintech sector are roughly half the size.
Though coming off a low base, the number of Indonesian fintechs grew 78 percent in 2016, according to a report by Fintech Indonesia. Growth was boosted by A$50 million worth of domestic investment. Although the report only captures what figures were disclosed.
As well as Australian, Indonesia has been the sight of increased interest from Chinese fintech companies.
Tencent and Alibaba, China’s two largest tech companies, launched multi-million dollar partnerships the past twelve months. “China’s internet giants are making their way into Indonesia in a big way,” an Indonesian newspaper recently noted, with obvious implications for fintech.