Jason Thompson, CEO, OVO: Interview

Interview: Jason Thompson

How do regional and global trends in the financial technology (fintech) space impact the market?

JASON THOMPSON: In the global fintech space the Chinese and Indian markets are already rather saturated, which is why venture capital firms and tech innovators are aiming for the South-east Asian market. The Chinese and Indonesian markets are similar in the sense that both are currently moving from cash to e-money. The Indonesian market, however, saw e-money transactions of $3.4bn in 2018, which indicates that its fintech segment is currently growing faster than that of China or India. The single biggest challenge for all fintech players is the strength of traditional financial institutions, as over 90% of customers still use cash. Payment companies generally start with specific use cases. For instance, WePay began as a chat app and then introduced a payment method. AliBaba also first focused on e-commerce before introducing payments. Therefore, traction will initially result from a use case’s core strength.

In what ways does the current regulatory framework facilitate technological innovation?

THOMPSON: Both regulators are very open-minded.

They want to provide and receive feedback that is conducive to business development. Particular progress can be seen regarding standardising access. Since the industry has adopted the national payment gateway, increasing numbers of e-wallets have been launched. However, more regulation is required for consumer data as the industry moves into virtual and credit cards. Regulations generally develop after technology: innovation would not be truly innovative if it followed the regulations. Thus, fintech players are responsible for educating the market and collaborate with the government to ensure everyone can enjoy the benefits of the digital economy. Ultimately, fintech plays an important role to promote financial literacy and inclusion. We believe that everyone has an equal right to enjoy the benefits of modern financial services, from people living in Jakarta to those located on Indonesia’s most remote islands.

How would you describe the particularities of the Indonesian fintech segment?

THOMPSON: The Indonesian economy remains dominated by cash transactions, which account for some 90% of interactions. Therefore, the main competitor to many fintech players is cash: executing a payment requires trust, which can take time to build for digital payment methods. For instance, it took five to eight years for WePay and AliPay to take off and establish trust in China. As a result, it is important to educate consumers about the advantages of secure e-payment methods. One of the other challenges is to build platforms for unique markets. Many fintech organisations, including those with services relating to credit scoring and digital identification, are looking for market entry.

Going forward, what innovations can be expected in Indonesia’s fintech segment?

THOMPSON: The true innovation in the payment space lies in the virtualisation of the wallet, and hence in the virtualisation of the card. The wallet sits in a standalone app, through which funding sources and individual data can be managed. Car parking and food transport are the traditional use cases of fintech payment methods. Domestic remittances also remain a big problem in Indonesia, and managing a secure peer-to-peer (P2P) domestic remittance service is thus critical. The next phase for P2P remittance transfer is governmental or end-user dispersal. What must be ensured, though, is that recipients receive 100% of the transfer. Digital wallets are designed for all Indonesians, whether these relate to payments, investments or lending. Perhaps the sector being most visibly disrupted by fintech is transportation, notably toll roads, car sharing and public transport.

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The Report: Indonesia 2019

Fintech chapter from The Report: Indonesia 2019

Cover of The Report: Indonesia 2019

The Report

This article is from the Fintech chapter of The Report: Indonesia 2019. Explore other chapters from this report.

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