Mandiri Capital Indonesia, Saison International, and Saison Capital hosted their first joint conference, “On The Axis: Reinventing Finance.” The event brought together industry leaders, innovators, and regulators to share knowledge, form partnerships, and create strategies that will shape the future of Indonesia’s financial landscape.
At the assembly, Kosuke Mori, CEO of Saison International, underscored the continuous growth of Indonesia’s financial industry. He reiterated Saison International’s steadfast belief that the power of collaboration is instrumental in nurturing a more inclusive, forward-thinking, and sustainable ecosystem, which is a key factor in establishing a stronger and more resilient financial landscape.
Ronald Simorangkir, MCI’s CEO, stresses the importance of balancing regulation and innovation. Under his leadership, MCI is committed to facilitating collaboration between fintech and banks, aiming to deliver financial solutions that are both inclusive and sustainable.
The evolution of financial services is a perpetual journey, with user needs constantly evolving. This dynamic landscape necessitates the continuous identification and development of effective solutions by all stakeholders, including financial institutions and fintech entities. Strategic partnerships, effective collaboration strategies, and concerted efforts are key to achieving the shared objective of this cooperative endeavor.
Multi-Finance: Connecting Banks and Fintechs through Innovation and Resilience.
In light of the current state of the international market, Indonesia’s financial ecosystem stands to benefit from observing how multi-finance companies adeptly grasp both traditional banking and fintech terminologies, thereby fostering an environment conducive to innovation and adaptability. They aim to connect banks and fintech for flexible financial solutions to support Indonesia’s MSME-driven economic growth. Conversely, they see fintech as a partner in bridging the gap with MSMEs and addressing human resource challenges.
Sandbox: OJK’s Innovation Hub for Resilient Tech Development.
OJK is working to establish strong regulations to develop the fintech industry through the Financial Sector Development and Strengthening Law (P2SK Law). As a fintech regulator, OJK emphasizes the importance of the fintech industry’s market depth and innovation capacity.
Additionally, OJK’s ITSK division and roadmap play a crucial role in sandboxing and evaluating the startup business model. They provide clarity and direction in the evaluation process and allow controlled experimentation for fintech and financial institutions. This collaborative approach prioritizes creating regulatory frameworks and fostering cooperation with the financial industry, ensuring the utmost safety for customers and fostering a sense of shared responsibility.
Beyond financial gains, Mandiri’s focus is to represent a collective vision to advance Indonesia’s MSMEs.
Mandiri prioritizes more than just financial gains in its collaborations with fintech partners. The realms of fintech and banking have distinct capabilities, preventing fintech from taking on the role of traditional banks and vice versa. This difference is significant. Aligning values and missions is crucial for sustained collaboration and mutual benefit.
Ashraf Farahnaz, Group Head of Micro Development & Agent Banking of Bank Mandiri, says that Mandiri is actively pursuing startup partners with strong risk management, governance, and compliance capabilities, who are committed to continual enhancement and alignment with its vision of fostering a more extensive, sustainable impact on the prosperity of Indonesia’s MSMEs. This shared value system aims to drive long-term growth and progress for small businesses nationwide.
To Go Beyond: Financial institutions and Fintech partnership must progress beyond their original concept
Adrianus Hitijahubessy, the CEO and co-founder of Julo, emphasizes the importance of partnership in fintech and financial institution collaboration. He believes that this partnership should go beyond the traditional vendor-client relationship, which usually focuses solely on exchanging product offerings. Instead, it should involve a deep understanding of each other’s needs, limitations, and contributions to the collaboration.
Benedicto Haryono, CEO of KoinWorks, highlights the critical need for robust infrastructure development across all stakeholder levels when building partnerships. By fostering deeper collaboration among fintechs, financial institutions, and regulators, the industry can not only improve the quality of services but also implement stronger risk mitigation strategies. This approach ultimately strengthens the fintech ecosystem, enabling it to support sustainable growth and resilience.
Ensuring the longevity of the partnership requires a strong willingness, enhanced business skills, and a comprehensive understanding of the mutual benefits. Unlike a vendor-client relationship, which can easily be replaced for better pricing, a partnership is expected to last much longer.
To future-proof businesses, enhancing operational resilience is key.
In today’s rapidly changing digital environment, operational resilience is essential for businesses. It allows them to efficiently manage and recover from disruptions, which can result in various negative consequences.
According to Bank Mandiri’s Group Head of Micro Development & Agent Banking, Ashraf Farahnaz, to achieve this, they require a strong infrastructure that offers high agility, scalability, and performance while reducing downtime and latency. These components are not optional but essential for any business seeking success.
Embracing the New Normal: Catching the Fintech Wave
JP Ellis, an associate partner at McKinsey, says the current funding trajectory for fintech startups indicates a decline, potentially stemming from a temporary reduction in venture capital investment.
However, this downturn is part of a cyclical trend and is now considered the industry’s new normal. Forecasts suggest a resurgence of fintech in an adapted form, marked by stringent compliance measures and a heightened emphasis on inclusion to education to experience.
Artificial intelligence is anticipated to be pivotal in influencing the sector’s revival through concise communication, customized customer experiences, coding, and content creation. It will also be strengthened by streamlining OS and application hardening.
And lastly as the industry awaits this development, it is crucial for fintech companies, financial institutions, and regulators to be prepared and consistently do collaboration for innovation, not just for commercialization, thereby elevating each respective business landscape.
To transition out of the middle-income bracket, Indonesia needs to achieve an 8% growth rate.
Industry experts frequently reference the “missing middle” and “ultra-micro” sectors in discussions related to GDP. It’s important to recognize that the ultra-micro sector alone lacks the capacity to significantly influence GDP growth or drive the industry forward. Startups play a crucial role in this.
Therefore, there is a need for more innovation and startups. This empirical change needs to take place if Indonesia is to achieve 8% growth and reach the sought-after outcomes. Furthermore, it is poised to pave the way for potential investors to access previously untapped markets, a prospect anticipated by the industry as a focal point for the new government’s agenda in 2024.
Reinventing finance involves more than just overcoming challenges; it’s also about seizing opportunities through partnership.
The message highlighted throughout the conference was clear: individual efforts are not enough. Qin En Looi, a partner at Saison International and a venture capitalist, emphasized the need for collective endeavors. Each stakeholder should work together to enhance their contributions to Indonesia through sustainable partnerships.
