KSEI: Will Fintech Investment Funds Continue to Soar After a 41%

The surge in June 2022? As of June 2022, the investment funds managed through fintech
have reached IDR 22.09 trillion (approximately USD 1.5 billion), reflecting an increase of
41.06% compared to December 2021 when the amount was IDR 15.66 trillion
(approximately USD 1 billion). The rise in awareness of investing among the public due to
the COVID-19 pandemic, coupled with the growing penetration of digital technology, has
been driving the surge in the number of investment funds managed by fintech companies.
The CEO of the Indonesia Central Securities Depository (KSEI), Uriep Budhi Prasetyo,
stated that the fintech-managed investment funds have been increasing continuously, with a
2.3% monthly increase from May 2022 when the amount was IDR 21.58 trillion
(approximately USD 1.4 billion).

This impressive growth in fintech-managed investment funds is particularly noteworthy,

given that the majority of the industry's retail customers come from the millennial and Gen Z
generations, and despite the current challenges faced by the industry. This can be seen from
the declining trend of the investment funds managed by the domestic mutual fund industry,
which has decreased for seven consecutive months as of July 2022.

It was not until August 2022 that the investment funds managed by the industry showed a
monthly increase, although they are still negative on a year-to-date basis. According to data
from the Financial Services Authority (OJK), the investment funds managed by the domestic
mutual fund industry in Indonesia increased for the first time this year in August 2022,
reaching IDR 544.84 trillion (approximately USD 36.7 billion), which is an increase of IDR
1.35 trillion (approximately USD 91.1 million) or 0.25% from the July 2022 position of IDR
543.49 trillion (approximately USD 36.6 billion).

However, compared to December 2021, which had a value of Rp579.96 trillion, the assets
under the management of mutual funds in August 2022 decreased by Rp35.12 trillion (-
6.06%). Going forward, the role of fintech in boosting the capital market and mutual fund
industry is increasingly promising, especially with the tech-savvy millennial and Gen Z
generations who seek convenience and speed in their transactions. Meanwhile, KSEI is also
preparing its infrastructure to improve the industry's services and efficiency.
This is evident from the trend of increasing fintech assets under management in recent years.
Compared to 2018, where fintech assets under management were only Rp688 billion, as of
June 2022, the value has grown 32 times. The upward trend has always been above 100% per
year since 2018, although the percentage increase slightly slowed down in June 2022.
However, in the remaining six months of 2022, the fintech industry still has the opportunity
to boost its assets under management and achieve a similar achievement as in 2021, which
recorded a 138% increase.

In the future, the role of fintech is even more promising because the millennial and Gen Z
generations are highly tech-savvy and seek practical and faster ways to transact. "Meanwhile,
KSEI is also preparing its infrastructure to improve industry services and efficiency,
including simplifying account opening and KYC (know your customer) administration," he
revealed.

Despite the fintech industry's success in recording an increase in assets under management,
its market share in the capital market industry is still small. This condition could be an
opportunity for industry players to continue to expand and attract more investors, especially
the younger generation who will ultimately boost their assets under management. As of
August 8, 2022, the number of capital market investors reached 9.37 million, an increase of
25.2% compared to December 2021, which was 7.48 million.

Of that number, 9.34 million or 99.61% were individual investors, and only 37,000 or 0.39%
were institutional investors. Millennials and Gen Z investors under the age of 40 dominate or
contribute more than 81%. Of the total number of investors, men account for 62.6%.
Interestingly, out of those numbers, 7.27 million investors have a Single Investor
Identification or SID in fintech companies, or precisely 7,278,190 investors, accounting for
approximately 77.62%. Out of that number, 7.27 million fintech investors are individual
investors, and only 324 are institutional investors. "In total, there are 13.15 million SIDs in
KSEI, including an additional 4.02 million SID investors in S-Multivest or Tapera (People's
Housing Savings) customers." With the increasing number of investors through fintech,
investment industry growth through digital platforms has significant potential to continue to
grow and expand in the future.