Indonesia’s Bank Central Asia (BCA), the country’s largest private bank, has steamrolled its way into the Fintech space with an investment of 200 billion rupiah (approx. $15 million) in financial technology startups and companies.
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The private lender is establishing Central Capital Ventura (CCV), owning all 100% of the new capital venture firm.
According to an official BCA statement submitted to the Indonesia Stock Exchange (IDX), investments will directly benefit BCA and its financial services offerings in the country.
As reported by the Jakarta Post, an excerpt from the stock exchange filing reads:
CCV has a plan to invest and collaborate with fintech companies and financial firms that will support BCA and its subsidiaries’ financial services ecosystem to add value for customers.
BCA has a significant retail banking footprint in Indonesia, with some 1,200 branches across the country. Despite being the largest private bank in the country with 660 trillion rupiah in assets as of September 2016, it is playing catch up to a 500 billion rupiah (approx. $37.5 million) venture capital unit set up by state-owned Bank Mandiri.
Bringing Banking to the Unbanked
The notable push toward Fintech-based offerings is a marked effort by banks to provide banking services to adult Indonesians, over half of whom do not have bank accounts. Penetrating rural areas with banking offerings have proven particularly tricky as settling for existing banking infrastructure reliant on branches and paper correspondence have proven expensive.
Fintech solutions have bridged the gap, using seamless credit quality checks and paperless payment technologies to bring banking to the unbanked via smartphone applications. The obvious space for Fintech companies has created a boom in the sector and the big banks are looking to capitalize with their considerable resources.
Figures from Indonesia’s Financial Services Authority (OJK) reveal a staggering 135 fintech startups in Indonesia, as of December, 2016. That number is up nearly threefold from the 51 recorded in Q1 2016. The publication also cites a market statistics firm which forecasts an annual growth rate of 19.8 percent in fintech transactions from 2016. Total transactions within Fintech platforms in Indonesia are expected to reach $37.15 billion by the year 2021.
New regulations from the OJK as financial regulator has only spurred on interest in the burgeoning sector, with robust requirements relaxed for industry startups and companies to flourish and contribute to a developing Fintech sector in the country.
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