Socio-Economic Outlook Of Indonesia
Indonesia is the 4th most populous country (270.6 Mn) in the world holds high potential for economic growth with >60% of its population lying in the working-age group. Easy & affordable internet accessibility has been driving the country’s preference for online platforms for shopping, bill payments, banking services, etc.
Owing to limited financial infrastructure & less financial awareness, ~60 of the population remains unbanked; therefore are often looking for alternative financial solutions. This has led to the growth of the fintech industry in the country with over 170 players operating as of 31st December 2019.
In 2019, the country experienced its weakest economic growth since 2015 owing to a fall in its second-largest GDP contributor i.e. exports & international investments. The country’s economy is highly dependent on production from MSMEs (~60% contribution to GDP in 2018) therefore multiple government initiatives like “MSME Go Online” have been taken for their digital transformations & overall development.
Household Consumption Expenditure grew at the rate of 8.4% in 2019, underpinned by increasing population & declining inflation rate
Declining BI rate (Policy Rate) has helped in increasing the country’s lending further helping in economic development
Overview Of Banking & Fintech Industry In Indonesia
~70% of the Indonesian population still suffers from credit inaccessibility due to limited banking reach & preference towards high creditworthy individuals. Solving this, we see many upcoming online lending platforms such as Crowdo, Modalku, Cashwagon, etc. Leveraging their technology & increasing popularity banks like BNI, Bank Mandiri, etc are partnering with fintech players to further increase their reach & services.
Overview Of Insurance Sector In Indonesia
GWP collected in Indonesia for the year 2019 stood at IDR 179 Tn driven by growth in Motor & Health Insurance. In comparison to other countries, Indonesia lags behind with a penetration rate of just 2.9%. Relying on traditional methods Bancassurance continues to be the preferred choice among customers. Microinsurance products have been gaining traction, provided with smaller premium packages (~IDR 10-50,000) & limited coverage.
Household/Retail Lending Scenario In Indonesia
Driven by demand for Mortgage loans, multipurpose loans & SME loans, Household Credit in Indonesia has been recording a Y-o-Y growth of more than 5%. With the majority of the population located in urban areas, demand for retail loans was seen to be concentrated in areas of Java, Sumatra & Sulawesi.
Customer Journey: 7 step process starting from a customer visiting the website & choosing the suitable option with help of multiple filtering & sorting options to the customer receiving loan amount/insurance policy. After-sales support is also provided in form of claim assistance, renewal notifications & suggestions for other suitable products.
Revenue Model: Prevalence of three revenue models including Fixed Fee per product (mostly used for credit cards), Commission Earning (Insurance, Loan Products) & Guarantee based Reward. Guarantee based Reward is opted for by aggregators in certain cases only.
Organizational Structure: With an average employee base of 200 employees, ~60% of people employed in the Telesales department to drive sales & provide assistance for loan & insurance products.
Technology Stack: In-house developed website incorporating AI & ML models to segregate customers & suggesting suitable options depending on the customer’s needs & background. CRM software including calling software, automated email generators, Plugin/APIs acquired from third-party vendors to fetch customer background, ease online documentation process, etc.
Marketing Strategies: Online Marketing campaign is observed to be the most preferred & effective marketing strategy producing up to 50% revenue growth & generating ~leads per product. Other preferred marketing sources include blogs, offline banners, agent-led distribution, discounts/offers, etc.
Regulatory Landscape: Governed by OJK & Bank of Indonesia, registration process completed with 30 days of submitting the application with the required documents. Aggregators are required to also follow governance & reporting guidelines as prescribed by OJK Indonesia. For example, Providers are required to regularly submit their Performance reports, Self-Assessment Report& Consumer related information (like an investment, returns, portfolio details, etc) to the Financial Services Authority.
Competitive Landscape Of Aggregators
Growing at the rate of > 15%, the industry is concentrated among top players including Cermati, CekAja, Futuready, CekPremi, Aturduit competing on the basis of Traffic Generated, Exclusive Partnerships with Service Providers, After Sales Processes/Assistance, discounts & offers provided, etc. While some of the players have expanded to segments of Wealth Management and P2P lending to become a one-stop solution provider, others are considering taking up expansionary plans in coming years.
Future Outlook Of Indonesia Loan & Insurance Industry
Owing to the economic shock brought in by COVID 19, the demand for loan & insurance products are expected to witness tepid growth during 2019-2020. With the given rise in unemployment & salary cuts, demand for short term loans & credit cards increases as people’s reliance on them increases for paying their utility bills.
COVID has also made Indonesian people realize the importance of health insurance as many struggle to pay their hospital bills. Insurance providers have been investing in the development of other niche insurance segments like pet insurance, electronic device insurance, etc. Upcoming product innovations aimed at becoming microinsurance depict high potential for the insurance industry in Indonesia.
Outlook Of Online Loan & Insurance Aggregators In Indonesia
COVID 19 outbreak expected to bring in major lifestyle changes making consumers prefer contactless services thereby creating a high potential for online loan& insurance aggregation services.
Analysts at Ken Research estimate that as a part of expansionary plans, major players are expected to diversify more in providing customized solutions, increasing the role of AI & ML in customer segregations & advisory services & the development of new products.
Companies Covered: –
Time Period Captured in the Report: –
Historical Period: 2015–2019
Forecast Period: 2020-2024
Key Topics Covered in the Report: –
Socio-Demographic, Economic, Banking & Fintech Scenario in Indonesia
Insurance Scenario in Indonesia with segmentation by Insurance type including Motor Insurance, Health Insurance & Life Insurance
The lending scenario in Indonesia with segmentation by Loan to Government, private (Individuals, NBFIs, NFIs) and Others
Household/Retail Lending Scenario with Segmentation by Multipurpose Loans, Mortgage Loans, Credit Cards, Auto Loans, Loans to MSMEs, Home Appliance Loans & Others
Gaps in Traditional Loan Industry fulfilled by Online Loan Aggregators
Online Loan Aggregator Industry in Indonesia with Revenue Models followed
End-to-End Customer Journey followed
Technological & Organizational Structure followed
Competitive Landscape including Overview, Ecosystem & Cross Comparison among major players on basis of Operational, Loan/Insurance Providers, Product Portfolio and Website Features
Company Profiles- Cermati, CekAja, CekPremi, Aturduit, Futuready & KreditGogo
International Case Studies-PaisaBazaar& PolicyBazaar (India)
Future Outlook of Loans and Insurance & Online Aggregators
Impact of COVID 19
For More Information on the Research Report, refer to the below links: –
Related Reports by Ken Research: –
Contact Us: –
Ankur Gupta, Head Marketing & Communications
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