Indonesian Sharia Fintech Market is the 5th Largest in the World
The latest report from the global news platform Salam Gateway shows that Indonesia is the fifth largest share of the Islamic financial technology (fintech) market in the world. Startup Investree also noted that millennials dominate borrowers on the platform.
Chairman of the Indonesian Joint Funding Fintech Association (AFPI) and CEO of Investree Adrian Gunadi said sharia fintech services are growing rapidly. “Indonesia is a market with significant growth. Ranking fifth,” he said during a virtual press conference, Wednesday (5/5).
In a report titled Global Fintech Islamic Report 2021 from Salam Gateway, Indonesia’s sharia fintech market is US$ 2.9 billion or IDR 41.7 trillion.
The first rank is Saudi Arabia with US$ 17.9 billion. Then Iran with US$ 9.2 billion, United Arab Emirates US$ 3.7 billion, and Malaysia US$ 3 billion.
Adrian conveyed the large potential of the sharia fintech market in Indonesia because of the large Muslim population. Globalreligiusfuture data shows that Muslims in the country increased from 209.12 million in 2010 to 229.62 million last year.
The Growth of Sharia Fintech is Driven by Millennials
In addition, the growth of sharia fintech in the country is driven by millennials. “The users are dominated by millennials,” said Adrian. At Investree, for example, the share of borrowers aged 21-30 years reaches 47% of the total.
Then 31-40 reached 36% and the remaining 12% were aged 41-50 years or generation X. In addition, Adrian considers that there is quite a lot of interest in Islamic financing schemes in Indonesia.
Consumption and exports of Indonesian halal products increased respectively by 3.6% and 19.2% in 2017 according to the State of The Global Islamic Economic Report.
Domestic Islamic financial assets also reached around IDR 1,155 trillion. It entered the top 10 in the world in 2018.
“Sharia fintech, with technological capabilities, can contribute to the growth of Islamic-based financial services,” said the Lead Research Economist of Islamic Development Bank Mohammed Obaidullah at the Indonesia Fintech Summit 2020, late last year (12/11/2020).
Moreover, digitization has become more massive during the corona pandemic, including financial services. Vice President Ma’ruf Amin said that Islamic finance contributed 8.69% of the total financial industry in 2019.
Online Loans of IDR 182 T, Fintech Lending Transactions Up 3 Times
The Financial Services Authority (OJK) noted that credit disbursement by financial technology startups (fintech lending) was IDR 182 trillion as of March. Companies in this sector also recorded a threefold increase in transactions during the first quarter.
Fintech in the education sector, Pintek, for example, posted a threefold increase in loan disbursement on an annual basis (year on year / yoy) in the first quarter.
However, Pintek’s Co-Founder and President Director, Tommy Yuwono, did not specify the credit value for the first three months of this year.
Meanwhile, total credit distribution since 2018 has been more than IDR 143 billion. This year, Pintek targets to provide loans of up to IDR 700 billion. The target is in line with the licensed status that Pintek has officially obtained, based on the OJK decree dated April 21.
Then, Modalku recorded a total loan disbursement of IDR 23.4 trillion as of March. “With 4.3 million loan transactions in Southeast Asia, including Indonesia,” said Co-Founder and COO Modalku Iwan Kurniawan in a press release, Thursday (6/5).
As of the end of last year, the company had distributed IDR 22 trillion. That means, loan disbursement during the first quarter was around IDR 1.4 trillion. Lending by Modalku over the past year has doubled compared to 2019, despite the corona pandemic.
Iwan said the company is targeting more potential MSMEs this year. Therefore, Modalku collaborates with various ecosystems. Most recently, this fintech hooked up BRI Agro, which acts as a lender (lender).