Fintech firms are buying Indonesian lenders

Financial tech firms are buying Indonesian lenders as access points into the nation untapped banking sector

The entry of tech giants in Indonesia banking industry creates an avenue to access more than 83 million new client base – nearly a third of the nation's entire population – who still have no access to formal banking services.

Sea Ltd. and Gojek are snapping up Indonesian lenders, with hopes that it will give them a soft landing as they make headway into one of the world’s largest 'unbanked' markets.

The buying spree is expected to continue as financial technology firms are now paying attention to the nation’s more than 175 million Internet users, many of whom are currently reliant on e-banking services. Sea acquired PT Bank Kesejahteraan Ekonomi this year, while Gojek made its biggest fintech investment by spending about $160 million to increase its stake in PT Bank Jago in December.

While Indonesia currently ranks as the largest market for fintech in Southeast Asia, it’s also one of the few that don’t grant licenses to digital-only banks. The U.K., Hong Kong and Singapore have allowed virtual lenders, while neighboring Thailand and the Philippines are actively reviewing the matter.

Indonesia currently ranks as the largest market for fintech in Southeast Asia, it’s also one of the few that don’t grant licenses to digital-only banks

This makes acquisitions the only access point into Indonesia and the Financial Services Authority is gunning for a more consolidated system among its over 1,600 commercial and rural banks in lieu of issuing new licenses.