Due to the increase of pandemic cases and in so many countries, investors today are becoming much more careful, especially on the domestic market of private equity Indonesia. However, not everything in the middle of a pandemic is bad. There are still opportunities in the market of private equity.
Private equity deals in Southeast Asia countries cover some different sectors. Indonesia for example, is a special country where there are tech deals in large proportion that are consistent. There are interests in some different areas, such as healthcare, technology, and consumer goods.
Fintech Opportunities in Indonesia
The space of fintech is nascent. However, this sector shows promise for the massive increase. Payments become the entry point for the consumers and will pave the future for lending. Financial technology will be a bridge to the gap for credit access in Indonesia.
Financial technology lending can also be a bridge to the gap for the financing capacity that is still unutilized. SME lending becomes more attractive and will present the opportunities for the investment. This sector is still a promising sector if you are interested in expanding to Indonesia.
Digital Payments and Transactions in Indonesia
This is the first sector in financial technology that becomes the biggest opportunity of private equity in Indonesia. About 4 to 5 top players are controlling more than 90% of the market share of transactions. To enter this market, high ticket investments are necessary.
Even the regulatory landscape in Indonesia is evolving. Bank Indonesia, the main bank in Indonesia, supports the cashless payments by launching QRIS which is going to unify the cashless payments that are based on the QR code. This reduces the barriers and allows the new players to enter the market.
Indonesia Market Report about Financial Technology Lending
Digital payments and transactions are not the only fintech product that offers wonderful opportunities for the private equity businesses. Report about fintech lending in Indonesia shows that the market landscape of this segment is fragmented. There are no clear details about the market leader.
According to the Indonesia market report, the market is also under penetrated, with only 0.2% fintech loans that function well within the total loans that are outstanding. Traditional banks in Indonesia still cannot address the market. Fintech lending especially to SMEs can target invoice financing.
Traditional banks cannot do the same since they have a long process to approve the credit for the SMEs segment.
Financial Product Opportunity in Indonesia
Financial products are a small sized market, it is because of the low capital financial literacy and market penetration. Unfortunately, financial products gain less opportunity compared to fintech lending, because Indonesia consumer behaviour is not shifting.
The financial product sector is dominated by the banks that are located in Indonesia. However, there is no shift that is seen in Indonesian consumer behaviour despite the platforms of e-commerce. Financial technology lending is offering the best opportunity for private equity Indonesia.
Indonesia and its fintech opportunity must be the first consideration when you are planning to expand to Southeast Asia. Then you can consider expanding to other countries like Vietnam and Thailand.