Why Indonesia is the Asia’s next digital payments battleground
As we start a new decade, it’s
increasingly clear that digital,
mobile, and social media have
become an indispensable part of
everyday life for people all over
the world.
This latest Global Digital Reports
reveals that more than 4.5 billion
people across the globe now use
the internet, while social media
users have passed the 3.8 billion
mark.
The south-east Asia’s largest economy ── which has accelerated it's adoption of digital services ── the growth that was projected to take years has only taken months.
Indonesia 2020 analyses the potential for financial technology
players to meet the needs of the world’s fourth-largest unbanked
population. In the current context, accelerating a shift to digital
payment methods is just one example of the potential impact of Covid-19,
as detailed within OBG’s latest publication.
E-commerce accelerating briskly:
Indonesia is currently an E-commerce hotbed in Southeast Asia. This
industry is seeing lots of investment and has great potential to
continue being one of the biggest E-commerce economies in Southeast Asia.
According to a recent survey,
Indonesia’s E-commerce sector is expecting 50% year-on-year growth with
its value set to reach $35 billion in 2020, up from $23 billion in
2019. What’s more, 30% of the country’s growing E-commerce market is new
to online marketplaces and 40% intend to keep using e-commerce after
the effects of the pandemic lessen.
According to McKinsey, Indonesia’s E-commerce industry is expected to hit $ 40 billion by 2022, a nearly four-fold increase. More Indonesians than ever are shopping online. Wearesocial and Hootsuite’s report mentions that 90% of all of Indonesia’s 152 million internet users have purchased online before.
International marketing on the surge:
Indonesia’s digital economy has already attracted international
attention, with four ‘unicorn’ start-ups valued over $1bn, plus one
‘decacorn’ that has surpassed the $10bn mark. The future looks set to be
even more promising for the country’s burgeoning tech segment, as
various homegrown companies have begun to expand beyond the border,
while an increasing number of international services providers have
selected Jakarta for their first cloud data centres in the region.
Lately, Facebook and PayPal, have announced their investment made in Gojek. With this investment made, they have joined the group of other high-tech firms, Google and Tencent, which have also backed Gojek. It is Indonesia’s first and fastest-growing application for shopping, food ordering, commuting, and making digital payments across Southeast Asia.
Digitizing Healthcare Sector:
Many major hospital operators in Indonesian have launched their own teleconsultation services to tap into the growing telemedicine market in the country, which has been further accelerated by the COVID-19 outbreak. According to Market Data Forecast, the telemedicine market in the Asia Pacific is projected to grow from US$8.51 billion in 2019 to $22.45 billion by 2024.
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| Credits: thejakartapost.com |
Aside from teleconsultations, Hospital's digital platforms has also adopted teleradiology, in
which radiological images such as X-rays, CTs and MRIs can be
distributed across its hospital networks. The hospital is now working on
a plan to use telemedicine to help monitor patients’ conditions
remotely ── says reports.
Fintech Investments on rise:
In a Google July 2018 report, 66% of Indonesians are unbanked. To fill this gap, e-wallets and other fintech services have sprung up.
Two popular dimensions of fintech services in Indonesia are digital payments (such as OVO and DANA) and peer-to-peer lending (such as KoinWorks and UangTeman). Indonesia’s Financial Security Authority
reports that online lending platforms delivered over $900 million in
loans through 2018; about four times as much as the amount in 2017.
Some of Indonesia’s largest banks are investing large amounts of money in developing their fintech solutions, including:
- BTPN ($89 million),
- Bank Mandiri ($22,4 million), and
- Bank BCA ($15 million).
Futuristic Analysis:
The move of digitization by Indonesia would expand the Indonesian economy by $10.5 B over the next
decade, adding 1 per cent to the country’s GDP by the end of 2030. The
country’s e-commerce market is projected to expand from $21bn in 2019
to $82bn by 2025, according to a recent study by Google, Temasek and
Bain & Co.
Google predicts that the market size will reach $53 billion by 2025. The gross merchandise value of this country’s digital economy might rise past $100 billion in 2025, contributing almost half of the region’s market value.
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