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By Hans De Back, Managing Partner, Finch Capital and Irmansyah Putera, Investment Manager, Finch Capital
Indonesia - the country with highest no. of people in Southeast Asia only has 49% of its population banked into its financial ecosystem, leaving a huge untapped fintech opportunities for those who are able to seize it. The rest of the ASEAN-5, those with fastest growing economies in the region are left competing to catch-up to Indonesia for the title of next most attractive fintech market in the region.Analysing the statistics, the next holy grail for Southeast Asia financial business is clearly laid: financial inclusion for those under banked populations. The ultimate question is how and who will end up winning. With increasing accessibility of affordable smartphone and the rate of internet penetration for the region stands at about 58%, those who are able to dispatch fintech services through mobile such as e-wallet savings, access to funding for SME, P2P mobile payment, cross-border remittance, basic data analytics through mobile PoS are primed to win the region, while overthrowing financial incumbents in power. The future is bright as more advanced services such as insurance, investment and personal finance will also able to be upsold once the user base is acquired. Looking at available options Banks are at a crossroad: choose to collaborate, invest in fintech startups or go and execute from the ground up. There is no time to stand still. If they don’t start digitizing their offering and win these unbanked cohort, they are risking themselves to be usurped by these newcomers, hungry for growth and significant share of the market. There are examples shown in Indonesia where Bank Mandiri starts embracing open banking concept by opening up its API for e-money system and setting up venture fund (Mandiri Capital) to invest in startups, similar to what is done by BCA and BRI. In the end, with emerging technologies setting a new bar for personalisation and value add, all stakeholders can be sure that rapid innovation in fintech will produce more positive than negative outcome whichever parties take charge of the throne.