It's time to pay attention to GoTo, Grab, and Sea's fintech arms

In The Top Up this week, we look at the fintech ventures of GoTo, Grab, and Sea, and dive into the complexities of student financing in Indonesia. [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: - The [growing significance]( of fintech services to Southeast Asian tech giants - Student resistance to online loans in Indonesia - A former salesperson [suing]( UK payments unicorn Rapyd for over US$1.1 million in unpaid commissions --------------------------------------------------------------- Hello {NAME} Every day, we’re presented with opportunities to prioritize what truly matters: staying home when sick instead of hitting the gym, attending our child’s school play over working late, or opting for a quiet night with a good book over a crowded event. Now, as AI and semiconductors shake up the tech scene, companies and innovators are diving in headfirst - just ask Masayoshi Son of SoftBank Group. Southeast Asia’s tech giants have demonstrated similar adaptability in their businesses. Since 2021, GoTo Group and Grab have both seen increases in the share of fintech as part of their overall revenues, showing that they haven’t rested on the laurels of their original ride-hailing verticals. Sea Group has also experienced this shift. In the first quarter of 2024, its financial services business, SeaMoney, overtook its gaming arm, Garena, to become the company’s second-largest revenue source after ecommerce, as my colleague Simon points out in this week’s Big Story. Fintech was the fastest-growing division among these three tech firms between 2022 and 2023, although their playbooks may differ depending on the businesses they are in and the strategic choices they make. Meanwhile, college students in Indonesia are still hesitant about taking on loans through digital platforms despite recent increases in tuition fees, which have sparked protests. What can online lenders do to address this? More on the Hot Take. -- Budi  --------------------------------------------------------------- THE BIG STORY [Why fintech arms of GoTo, Grab, Sea deserve more attention]( Fintech has the potential to be more profitable than the other business units of Southeast Asia’s tech majors.  --------------------------------------------------------------- THE HOT TAKE Online lenders don’t sufficiently address high tuition fees in Indonesia Here’s what happened: - In recent weeks, university students across Indonesia took to the streets to stage [protests]( after their schools raised tuition fees. - Many students also voiced their resistance to online lending platforms, which campuses have partnered with to [distribute]( educational loans. - Danacita and Cicil are among the online lending platforms that have partnered up with universities to channel such loans. Here’s our take: Attaining higher education in Indonesia is becoming unaffordable. “Poor people are forbidden from attending university,” reads [one of the signs]( carried by students of Gadjah Mada University during their protest earlier this month. There’s no clear reason as to what triggered the tuition hike. Some argue that it’s because the government has granted [autonomy status]( to some state universities in both academic and non-academic areas, which gives them space to set their own fees. This is worsened by the [suboptimal allocation of state budget]( for public university education, according to one official from the House of Representatives. He said that at one point recently, the tuition fees in a university in Central Java went up by 350% for new students. The government has defended the hike in college tuition fees by saying that it was [necessary]( in order for schools to meet quality standards. While there are government subsidies to offset universities’ operational costs, these are largely insufficient. Enter online lending platforms. With few alternatives, an increasing number of students are turning to startups like Danacita, Cicil, Edufund, and Julo to fund their education. Data from the Financial Services Authority (OJK) shows that as of March 2024, outstanding peer-to-peer loans amounted to [62.2 trillion rupiah]( (US$3.9 billion), with disbursements for education loans totaling 11.4 billion rupiah (US$711,000).  See also: [Can Julo’s 2 million users help it succeed in Indonesia’s student financing industry?]( However, once seen as a potential [billion-dollar industry](, the student financing sector in Indonesia has proven to be difficult to crack. For one, while the concept of student loans has been around through traditional banks [since the 1980s]( it remains unfamiliar to many people, with some Indonesians not fully understanding the long-term financial implications of taking on such loans. Due to the [high interest rates]( of education loans - up to 20% a year - many see them as a last resort. This has also become the basis of the recent protests, as students believe that such interest rates are [burdensome](. Moreover, online lending platforms are facing increasing competition from established banks such as Bank Rakyat Indonesia (BRI) and Bank Mandiri, which has been offering loans in larger quantums and at lower interest rates [since 2018](. Lending startups, with their focus on smaller loan amounts and underbanked or unbanked borrowers without a credit history, typically offer loans with shorter repayment periods. This approach helps to mitigate the risk of potential defaults. For example, Cicil offers education loans of up to 30 million rupiah (US$1,870) and repayment tenures of two to three years. Meanwhile, BRI’s Briguna Pendidikan service lends up to 150 million rupiah (US$9,380), with repayment terms of up to [10 years](. For context, tuition fees at Indonesia universities for an undergraduate degree can go as high as [50 million rupiah]( (US$3,120) per semester, though the costs vary by program. With a loan tenure of two to three years, some students barely have enough time to save up and settle outstanding debts before taking on additional loans when a new semester comes around. To take pressure off borrowers, OJK has continuously [tightened]( lending regulations, including placing a ceiling on maximum interest rates that online lenders can charge. The Indonesian fintech lending association [says]( it’s unclear if a hike in tuition fees will increase demand for online education loans. However, it expects education funds channeled by online lenders to grow “positively” due to increasing internet penetration. To differentiate themselves, online lending startups can potentially provide tailored repayment plans to accommodate students’ financial circumstances, such as allowing smaller payments during the study and gradually increasing them post-graduation. Offering personalized services could be one way to begin changing the game. Currency converted from Indonesian rupiah to US dollar: US$1 = 16,020 rupiah.  --------------------------------------------------------------- NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the fintech scene [here](. 1️⃣ [Pine Labs gets court nod to shift Singapore ops to India]( The merchant platform joins other Indian startups like Meesho, Razorpay, Udaan, and PhonePe that are also relocating or have relocated their overseas branches back to their home country. 2️⃣ [Wise introduces accounts service, prepaid card in the Philippines]( With these services, Filipinos can receive foreign payments for free, hold money in over 40 currencies, and transact in more than 160 countries. 3️⃣ [IPO-bound Indian insurtech firm Go Digit bags $141m]( The company, which had about 43 million customers as of 2023, streamlines the purchasing process for its auto, health, travel, and accident insurance products. 4️⃣ [MoneyHero onboards ex-Alibaba exec for CFO role]( Hao Qian spent nearly eight years at Alibaba Group, where he served as CFO for Lazada in Singapore, Indonesia, and Vietnam. 5️⃣ [OJK revokes TaniFund’s license, asks firm to liquidate]( TaniFund, a peer-to-peer lending platform under Indonesian agri-lending platform TaniHub, failed to meet the minimum equity requirements and to implement OJK’s supervisory recommendations.  --------------------------------------------------------------- FYI [Ex-staff sues fintech unicorn Rapyd, alleges $1.1m in unpaid commissions]( The UK-based firm has pushed back, saying its clients made “round-tripping” transactions that invalidated commissions.  --------------------------------------------------------------- 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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