IDC ANALYZE

THE
FUTURE

IDC PERSPECTIVE
Top Indonesian Fintech Start-Ups: Is Indonesia Breeding the
Next Southeast Asian Unicorn?
Handojo Triyanto

EXECUTIVE SNAPSHOT

FIGURE 1

Executive Snapshot: Top Indonesian Fintech Startups Potentially Got Mature Faster
than Others

Dozens of financial technology (fintech) start-ups are emerging in Indonesia driven by the high potential of this
market — a population of 261 million and with 30 million smartphone units a year sold in the last two years.
This IDC Financial Insights research aims to capture and analyze the fintech start-up landscape and provide
insights about the future of the Indonesian market. We highlight several good fintech start-up companies to
invest in and collaborate with, from an investor and technology buyers perspective, respectively.

Key Takeaways
• The Payments and Lending fintech categories are good for investment and collaboration. Our assessment
shows that there are more fintech companies in the higher level relating to those categories.
• The Business Model criterion is a key differentiator for leading players, particularly the Payments category.
• Speed to dominate the market is the key to win for fintech especially in the Payments category. It is driven by
the trend to be more in line with the increasingly digital lifestyle of consurners.
• Other categories such as Accounting Cloud, Company Solutions, Marketplace, and Wealth Management are
also good for investing due to lower risk and fewer competitors.

Recommended Actions
Next6 months • Determine the investrnent or collaboration strategy for the fintech segment
• Perform further assessment of the shortlisted fintechs

6-12 months • Invest in or collaborate with the selected fintech

• Monitor the growth of the fintech

More than 12 • Continuously monitor changes of the fintech landscape

months
• Create fintech start-ups separated from the existing traditional financial institutions

Source: IDC, 2018

April 2018, IDC #AP43698818

SITUATION OVERVIEW

Indonesia is the world's fourth most populous country with approximately 261 million people, and by its
sheer size alone represents a huge, promising market for commercial products and services. Digital
trends and behaviors exhibited by the population heighten this promise. Smartphones sold in
Indonesia reached approximately 30 million units a year for 2016 and 2017, lapped up by an
increasingly digitally active user base — Indonesia is home to 130 million active social media users
and has spent US$70 billion in online purchases.

Amidst all these trends rose dozens of financial technology (fintech) start-ups. IDC Financial Insights
believes about 100 new fintech offerings emerged in 2017 alone, with this number expected to easily
double in 2018. It is from this "livening up" of the fintech market that IDC Financial Insights came up
with research into the fintech start-up landscape, to investigate what is really happening on the ground,
helping investors make investment decisions and technology buyers choose potential areas of
collaboration.

What We Cover
The fintech start-ups (subsequently referred to in this document as "fintechs") that are included in this
document primarily fulfill the following characteristics:

 Start-up companies that provide products and/or services related to the financial services
industry such as lending, payments, and so forth
 Start-up companies that provide products and/or services primarily for the Indonesian market
 Start-up companies based in Indonesia
 Start-up companies separated from traditional institutions such as banks and insurance

List, List, List: The Universe of Indonesian Fintechs

IDC initiated this research by creating as comprehensive a list of all fintechs in Indonesia as of the end
of 2017. We focused on 75, quick to admit that this is not an exhaustive list, but rather a generalization
of the fintechs that represent the most mature fintech propositions at this point in time. The list can be
accessed in the separate spreadsheet.

The 75 fintechs can be divided into 8 categories:

1. Accounting Cloud-Based Software Provider

2. Company Solutions Software Provider
3. Crowdfunding
4. Cryptocurrencies
5. Lending
6. Marketplace
7. Payments
8. Wealth Management
Figure 2 shows the number of fintechs and its percentage by category.

©2018 IDC #AP43698818 2

FIGURE 2

Indonesian Fintechs by Category

8 1 1 4
11% 1%1% 6%
5
7%

20-
28% 15
21%

18
25%

•Accounting Cloud •Company solutions •Crowdfunding •Cryptocurrencies

•Lending •Marketplace •Payments •Wealth Management

Source: IDC, 2018

Maturity Levels
After coming up with the list of fintechs, we then measured their maturity based on IDC's definition of
the maturity levels or stages. To determine where a fintech stands on this scale, the company must
fulfill all criteria required for that stage or level. Figure 2 shows the descriptions for each stage.

©2018 IDC #AP43698818 3

FIGURE 3

Fintech Start-Up Maturity Levels

Optimized

Managed

Repeatable Valuable Player

Poterfal jsers are

Ad Hoc
ON:
Incubation Player
Potential users are rot yet
clear. Ma -agen-elt of tho
f rrl s poor. Prod:err er
serui,es ere diff'cu -.o :se.
Business Outcome
Few users use the
products or services.
Revenue is still low. Firm
valuation result is low.
Opportunistic
Growing Player
Potential users are promising.
Management is still poor.
Usability of products or
services is average.
Business Outcome
Users of the products or
services are growing.
Revenue is grayling. Firm
valuation result is still
below than peers.
Competitive Player
Potential users are promising.
The limes management is
good. Products or services
offer good user experience.
Business Outcome
High growth ratefor user
of the products or
services. Revenue is
growing immensely. Firm
valuation result is
average.
Leader Player promising. The firm has the
hes:management., ' -ocucts
anc serviees lave 7,best
Potential users are promising.
user ex,erie-ce
Tle fi Hes the best
lageryent. Products or
the late, -.echroloey.
ser,...ices _se advanced
tech, ogv. Business Outcome
>50% of targeted market
use the products or
services. Revenue is
Business Outcome
relatively high. Firm
Nurnber of users is the
valuation result is much
largest in market share.
higher than peers.
Revenue is higher than
peers. Firm valuation
result is above peers.

Source: IDC, 2018S

In addition, IDC has defined a list of criteria with conditions for each level that should be met by the
fintech. We used two sets of criteria: The first set of criteria refers to secondary sources of data and
information, while the second set of criteria refers to data generally collected through IDC primary
research (i.e., interviewing the companies themselves). At this point, the assessment we present is
based solely on the first set of criteria, which helped us draw up a shortlist of fintechs to watch —
essentially those fintechs that can potentially mature faster than the others. We will continue our
assessment of the fintech market in the next part of this series on Indonesian fintechs by delving into
the second group of criteria.

The first group of criteria is showed in Table 1, with each criterion scored across the five stages of
maturity specified in Figure 3 above.

©2018 IDC #AP43698818 4

 TABLE 1

Shortlist Criteria: Insights from Secondary Research

No. Criteria Description of Criteria Result Range

1 Utility Usefulness as to whether the Assessment results range

benefit offered is actually from nice-to-have to "having
very important or fills a real a lot of highly needed
need, not just a "good to products/services"
have"

2 Potential Customers The number of potential Assessment results range

users, based on IDC from few to huge numbers of
research potential users

3 Business Model The advantage of the Assessment results range

business model increasing from normal to "having a lot
sales (cross-selling) and of advantages"
efficiency

4 Usability Whether the solution is easy Assessment results range

to use for intended users, by from poor to "human-nature-
looking at similar features centric"
from other fintechs elsewhere
in the world

5 Competitiveness Comparison with competitors Assessment results range

(both traditional from few to a lot of
banks/financial institutions competitors and from weak to
and other start-ups) strong competitors

6 Valuation Fundraising from the Assessment results range

investors or the valuation from little to a lot of
result investment fund or low to
high value

Source: IDC, 2018

Ultimately, the purpose of the first set of criteria is to perform initial assessments for filtering fintechs
down to a workable shortlist.

The shortlist can be further fine-tuned to look into the organizational maturity that can be correlated to
funding and capacity to handle outside investments. We suggest the following criteria to be used in this
deeper, more extensive evaluation. We note, however, the difficulty in evaluating these fintechs in this
mire of a detailed set of criteria, especially in getting information from organizations that are privately
held. We will endeavor to get as much information as we complete data-gathering for our next report in
this series.

©2018 IDC #AP43698818 5

 TABLE 2

Maturity Criteria to Assess Organizational/Funding Capability

No Criteria Description of Criteria

1. Business Process The advantage of several functions such as: marketing, sales, operations

2. Top Management The qualification of the persons in the top management

3. Employee The qualification of employees

4. Culture The firm's culture supporting the best company growth

5. Technology The complexity of the technology used

6. Ubiquity Usability all over, whether they are already in use everywhere

7. Margin The products' or services' margin

8. Profitability The company's financial profitability

Source: IDC, 2018

Top Indonesian Fintech Start-Ups

Based on the first set of criteria, we assess the Indonesian fintechs.

TABLE 3

Top Indonesian Fintechs by Category

No. Fintech Description Category

1 Go Pay
The product is released by "Go Jek," the largest online Payments
platform company for transportation services in
Indonesia. Go Pay is the online payments system for all
Go Jek products or services as well as other
transactions.

2 Midtrans A provider of online payment gateways, supporting Payments

Indonesian ecommerce

3 DOKU Since its inception in 2007, DOKU, formerly known as Payments

PT. Nusa Satu Inti Artha, has earned recognition as the
first electronic payment provider and risk management
company in Indonesia. With hard work and totality in
supporting the online businesses of its merchants,
DOKU has proven itself trustworthy and has become the

©2018 IDC #AP43698818 6

 TABLE 3

Top Indonesian Fintechs by Category

No. Fintech Description Category

electronic payment service of choice, both for national

and international merchants.

4 Xendit Xendit is an application for peer-to-peer payment with 3 Payments

main functions: Deposit, Send/Request, and Withdraw.

5 T-Cash Telkomsel has been focusing on creating a digital Payments

financial ecosystem by offering various digital payment
solutions to ease transactions in the online marketplace.
In 2015, some innovations were introduced to enhance
its digital payment services such as the launch of New
TCASH and TCASH Tap with NFC technology. The new
TCASH enables customers and merchants to experience
a new payment method for any mobile transactions.

6 Modalku Modalku is a friendly and secure online platform for SME Lending
owners to start or grow their businesses by providing
access to funding from individual as well as institutional
investors. The service is operated by PT Mitrausaha
Indonesia Grup.

7 Investree Investree has a peer-to-peer (P2P) lending platform that Lending

connects people who want to invest money with people
who want to borrow money. Investree administers the
lending process by verifying borrower's creditworthiness,
facilitating the fund between borrower and investors, and
documenting legal loan agreement.

8 Akseleran Akseleran is an integrated peer-to-peer lending and Lending

crowdfunding platform for all new micro and medium-
sized start-ups to get loans and funding from the crowd
as a first seed to be established.

9 UangTeman UangTeman.com is an online lending service that Lending

provides instant short-term microcredit to Indonesian
consumers. The service is operated by PT Digital Alpha
Indonesia.

10 AturDuit.com Aturduit.com Indonesia is fully owned by iMoney Group, Marketplace

headquartered in Kuala Lumpur, Malaysia. It compares
credit cards, loans, broadband, and insurance by
providing consumers with the convenience of online
comparison and the benefit of telephone-based advice.
iMoney uses technology to offer consumers a free
analysis of their product needs followed by a
comprehensive review of products from its product
provider panel. This helps consumers avoid visiting
multiple suppliers to compare products and apply directly

©2018 IDC #AP43698818 7

 TABLE 3

Top Indonesian Fintechs by Category

No. Fintech Description Category

from their desktop or mobile using a secure application

process.

11 Finansialku.com Finansialku.com is a financial planner portal providing Wealth Management

financial information and solutions for individuals and
families. The portal provides financial application
(software/tool) and financial online and in-house
trainings.

12 Jojonomic Jojonomic is the leading mobile expense reimbursement Company Solutions

solution in Southeast Asia. It is a software as a service
(SaaS) business to business (B2B) fintech company
serving prominent enterprises throughout Indonesia.

13 Jurnal Jurnal is a tech company delivering web- and cloud- Accounting Cloud -Based
based accounting solutions for small to medium-sized Software Provider
businesses. It simplifies administrative processes to only
the essentials by giving users the convenience of
operating their business at any place and time, on any
device. Businesses running Jurnal are equipped with the
right tools to be a professional business.

Source: Corresponding company websites

A more detailed view of Table 3 including the assessment results are provided in the separate Excel
file.

IDC'S POINT OF VIEW

Some insights that can be extracted from the information above:

 Payments and Lending fintech start-up companies dominate the Indonesian fintech start-up
landscape both in terms of number and maturity, indicating opportunities for investments by
external parties or for collaboration with banks and the fintechs themselves.
 Indonesia has several fintech companies on the "leader player" level based on the first set of
criteria. Easily, the Business Model criterion becomes a key differentiator for leader players,
particularly in the Payments category.
 Market penetration is very important for any fintech start-up company especially for a huge
market such as Indonesia. In the end, the Indonesian market will consolidate into a few
alternatives especially as a "platform war" takes hold. The speed to dominate the market is the
key to win for fintechs especially in the Payments category, more so in the context of this
impending platform war.

©2018 IDC #AP43698818 8

  In the "platform war" innovation and financial capital take key roles. Fundraising from several
prominent fintech companies have already happened in Indonesia, portending a future of
building platforms that can withstand other alternatives, just by sheer financial ability to
withstand initial losses in building platforms, and to wait out the competition.
 Other categories such as Accounting Cloud, Company Solutions, Marketplace, and Wealth
Management are also good to invest in due to lower risk and fewer competitors.
 Collaboration between fintechs and traditional institutions (banks) becomes imperative.
Several Indonesian banks such as Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Central
Asia (BCA), and Bank Negara Indonesia (BNI) have collaborated either in the operations
aspect or in investments. Even the investments are conducted by the bank's owner, not the
bank itself.
 In the future the Indonesian fintech market will have consolidations by collaboration, mergers,
and acquisitions between the players. It has already happened as Go Jek (Go Pay) acquired
Midtrans, Kartuku, and Mapan. What drives this is the need to penetrate the consumer market
as soon as possible amidst the many players, not only to grab a higher market share, but also
to attract more investors.

LEARN MORE

Related Research
 First List of 50 Fintechs to Watch in Asia/Pacific (IDC #AP42328417, March 2017)
 Business Strategy: Understanding and Responding to "Fintech" (IDC #US41565016, July
2016)

Synopsis
Fintech — the entrance of new and often nontraditional vendors into financial services — has been a
hot topic of discussion in the technology space for some time, with interest fueled by the amount of
investment and attention being given to start-ups in the space. Indonesia, as the fourth largest country
in the world in terms of population, has attracted global players (Google, Alibaba, Tencent, etc.) to take
part in the Indonesian fintech development either as a player or as an investor. Is Indonesia breeding
the next Southeast Asian unicorn?

The insights about Indonesian fintech start-up landscape become crucial for investors, traditional
institutions, and fintechs themselves. Handojo Triyanto, senior research manager, IDC Financial
Insights, says, "The collaboration between fintech and traditional institutions (banks) becomes
mandatory for now and in the future." IDC has defined criteria to assess the maturity of the fintech
start-up companies and applied these to the Indonesian market in a study. The research provided
information on the top fintech start-up companies that can potentially become the next Southeast
Asian fintech unicorn.

©2018 IDC #AP43698818 9

About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory
services, and events for the information technology, telecommunications and consumer technology
markets. IDC helps IT professionals, business executives, and the investment community make fact-
based decisions on technology purchases and business strategy. More than 1,100 IDC analysts
provide global, regional, and local expertise on technology and industry opportunities and trends in
over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients
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