Funding falls, but these Indonesian fintech players still stand

In The Top Up this week, we map out Indonesia’s key fintech players and look at plans to expand cross-border payment linkages within ASEAN. [Read from your browser]( The Top Up 💵 Welcome to The Top Up! Delivered every fortnight via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in fintech. If you’re not a subscriber, get access by [registering here]( IN FOCUS In today's newsletter, we look at: - [Notable players]( in Indonesia’s fintech sector - An expansion of cross-border QR codes within ASEAN countries --------------------------------------------------------------- Hello {NAME} Fintech funding into Southeast Asia startups continues to be on a downtrend. A recent [report]( by data intelligence platform Tracxn found that total funding into Southeast Asia startups fell 13% year on year to US$530 million in the first quarter of 2024. This was largely led by a decline in late-stage funding, but decreasing seed-stage investments also contributed to the downtrend. Indonesia hasn’t been spared by the funding crunch. According to Tech in Asia’s data, funding into Indonesia’s fintech startups dropped sharply between 2022 and 2023. Deal count almost halved, while total deal value fell by 53% to US$850 million in 2023. But, in line with the rest of the region, lending and insurtech sectors held up in 2023, my colleague Budi notes in this week’s Big Story. The landscape map is an update of a previous iteration we first published in 2021, and reflects more recent funding trends in the past three years. Meanwhile, in our Hot Take this week, I discuss ASEAN’s plan to expand cross-border payment links within the economic bloc and how - despite the convenience that could come with it - it may not be able to eliminate cash entirely just yet. -- Melissa  --------------------------------------------------------------- THE BIG STORY [Mapping the Indonesian fintech players navigating a tech winter]( Between 2021 and 2023, the payments, lending, brokerage, and insurtech segments attracted the most money for the country’s fintech industry.  --------------------------------------------------------------- THE HOT TAKE QR code payments go even more mainstream in Southeast Asia, but eliminating cash is a tough sell Here’s what happened: - Earlier this month, ASEAN’s finance ministers agreed to expand cross-border QR payments within the economic bloc, Nikkei Asia [reported](. - Laos will launch a cross-border QR payment system with Thailand as well as Cambodia, and is currently negotiating a similar arrangement with Vietnam. - Singapore, Indonesia, Thailand, Malaysia, and the Philippines already operate several bilateral QR payment networks among them. Here’s our take: On a trip to China last year, I took a leap of faith by traveling fully cashless. I’m an avid user of multicurrency cards when I travel, but even with them, I tend to carry some cash on hand - just in case. Carrying spare cash on hand has proved to be the right call on other overseas trips I’ve made, especially when the multicurrency cards I own failed for reasons that tech support wasn’t able to solve on the spot. And, despite a general push toward digital in most economies, there’s bound to be the outlier merchant that only accepts cash. An increase in the number of digital payment options certainly addresses this. With cross-border payments solutions like Ant Group’s Alipay+, partner e-wallets previously limited to domestic transactions are now accepted in some overseas markets. E-wallets like Grab can also be used in multiple Southeast Asian countries. See also: [Alipay+ kicks off major expansion around Asian Games, betting on inbound tourists]( As cross-border QR linkages among [ASEAN]( member states expand, traveling in those countries is set to get even more hassle-free. Within Southeast Asia, Singapore already has [bilateral linkages]( with Malaysia (DuitNow), Thailand (PromptPay), Indonesia (via the QR Code Indonesian Standard, or QRIS), and it’s exploring another with the Philippines. Indonesia has linked its QR payment standard with Thailand’s and Malaysia’s too. (This list is not exhaustive.) These linkages allow users to scan and pay digitally overseas, directly from their bank accounts, without having to first top up funds into an e-wallet. But because such arrangements have to be negotiated bilaterally, they’re a relatively slow way to scale up. As Ravi Menon, the former managing director at the Monetary Authority of Singapore, pointed out before: “Three countries require three bilateral links, but 20 countries would require 190 bilateral links.” The creation of more choices has several implications for customers, businesses, as well as payment operators. Banks are a natural winner, and see a natural adoption of their payment services through their banking apps. E-wallet players - which still play an important role in enabling payments for those without bank accounts - must differentiate their offerings either by building more payment use cases or offering lower fees. Otherwise, they will end up losing customers to more convenient options. Some multicurrency apps, for instance, are attempting to drive stickiness by offering value-added services like stock trading and investing tools. A big beneficiary are the small and medium-sized businesses. Those who are yet to accept any form of digital payments could see an increase in transactions from digital-native tourists. Speaking on Singapore-Malaysia cross-border spending patterns, UOB [said]( that consumers spent an average of 34 ringgit (US$7.10) at the top 20 UOB Malaysia DuitNow QR merchants between December 2022 and February 2023. Close to 65% of these transactions took place at eateries, minimarts, and dry markets. Such transactions are expected to rise. UOB, for instance, projected cross-border payments using DuitNow QR to grow 4x between 2023 and 2028. But such solutions, like many things, aren’t fool-proof and come with their own set of reliability issues. In Singapore, [banking disruptions]( have put digital payment services like PayNow offline for hours on more than one occasion. That’s why despite the availability of options, it could be a while - years still - before fully cashless travel becomes a reality for most - myself included. Until then, I’ll be toggling between my credit cards, multicurrency apps, digital bank apps, and cash.  --------------------------------------------------------------- NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the fintech scene [here](. 1️⃣ [Atome Financial logs EBITDA profit in Q1 amid BNPL growth]( The firm, which operates buy now, pay later service Atome, saw its operating income climb from US$88 million to US$170 million in 2023. 2️⃣ [SG fintech firm Bambu shut down after missing profit targets, says founder]( The closure of the firm, which enables financial institutions to offer robo-advisory products, was mainly due to rising interest rates and a macroeconomic environment that made it hard to scout new enterprise deals. 3️⃣ [India-based trading app nets $12m to reach new users]( Stoxkart, which simplifies trading with its zero-brokerage model, claims to make trading more accessible. It competes with local players such as Zerodha and Groww. 4️⃣ [Indian mortgage fintech firm secures $40m to help low-income groups own homes]( First-time homeowners from the low-income and economically weaker segments - meaning they earn less than 600,000 rupees (US$7,200) in gross income annually - represent 93% of Altum Credo’s customers. 5️⃣ [Ex-Paypal execs’ fintech firm expects 200% revenue growth in 2024]( Primer operates in over 35 countries and lets companies offer multiple payments and commerce services through a single platform.  --------------------------------------------------------------- FYI [Grab has a super patient, trial-and error strategy to reach profitability]( The move to kill GrabPay Cards and cut losses in the fragmented payments space suggests the company is prioritizing profitability in its digital financial services segment.  --------------------------------------------------------------- EVENTS HAPPENING You can also check out a curated list of trending tech events [over here]( and Tech in Asia’s signature events [here](. [Saigon Summit 2024 : Charting Vietnam’s Tech Future on May 30]( Saigon Summit will host discussions on Vietnam’s trending verticals, such as ecommerce, fintech, and electric vehicles, with VNG, VNLife, Razer will share their stories and insights. Join us as we discover the undeniable potential of Southeast Asia’s next tech hotspot. [Grab your tickets]( before they’re gone! [Tech in Asia Conference Kuala Lumpur 2024 : Malaysia on The Rise on July 24-25]( Fintech and travel tech enthusiasts, this one's for you! Join us at the Tech in Asia Conference in KL to hear from Tonik Bank, CrescentRating & HalalTrip as they share their expertise and insights. Don't miss out - [purchase your tickets]( today! [Product Development Conference (Jakarta, 25-26 June 2024)]( In this edition of Tech in Asia’s flagship conference for product talent, get access to keynote presentations, interactive Q&As, and networking opportunities that help you to build, launch, and scale world-class products. Early-bird tickets are gone, but fear not—you can now grab first-release tickets at 50% off! Better yet, bring 2 friends and secure an extra 20% off. [Secure your spot now](. [Tech in Asia’s Founders Meetup in Vietnam on May 30]( Founders Meetup is returning to Vietnam as part of the official closing party of Saigon Summit! Unwind and connect with founders, startup leaders, and investors from across the region at this premier networking mixer. Early bird tickets are fully redeemed – [get yours at US$12 now]( ---------------------------------------------------------------  That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preferences center. In the meantime, if you have any feedback or ideas, feel free to get in touch with Terence, our editor-in-chief, at terence@techinasia.com. See you soon! 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