The battle lines of Indonesia’s digibank space

In The Top Up this week, we map out the digibank players in Indonesia and examine the country’s booming insurtech scene. [Read from your browser]( The Top Up 💵 Welcome to The Top Up! Delivered every Wednesday 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](. Written by Budi Sutrisno Journalist Hello {NAME} ​​Although I consider myself a millennial who is up to date on current trends, I didn’t realize how conservative I was about managing my money until I had a recent debate with my niece. You see, she and her friends - fresh out of high school - wanted to apply for a digibank account. I insisted, however, that decades-old conventional banks with established names were better. After comparing the upsides and downsides of each option, I finally respected her decision to use digibank services. One thing I realized during our discussion was how many new digibank players have connections with tech companies from other industries such as ecommerce. Allowing users to conveniently access banking services through tech partners seems to be a big draw for younger consumers. In this week’s Big Story, my colleague, Melissa, maps out just how many prominent tech companies in the region, like Sea Group and Gojek, have formed alliances with banks (if not conducted outright acquisitions). But traditional banks with abundant capital like Bank Central Asia and Bank Mandiri have also extended their reach in the industry as they aim for millions of digitally savvy and credit-hungry users - exactly like my niece. In this week’s Hot Take, meanwhile, my other colleague, Putra, looks at how the recent downturn in US insurtech startups has little bearing in emerging markets like Indonesia. -- Budi THE BIG STORY [The tech companies bankrolling Indonesia’s digital banks]( What do you get when you combine an Indonesian bank, an autos marketplace, and a digital lending platform? You get a digital bank. THE HOT TAKE A fruitful week for Indonesia’s insurtech players Here’s what happened: - Last week, no less than three Indonesian insurtech startups announced their latest funding rounds. - Cumulatively, the companies raised close to US$70 million, the bulk of which was from Qoala’s series B round. - This comes as US-based insurtech companies have struggled on the public markets in the past few months. Here’s our take: It’s no surprise that insurance is enjoying a boom in Indonesia, as the uncertainties from the Covid-19 pandemic have increased consumer appetites for insurance products. In 2020, the amount of premiums increased by 11% year-on-year to US$802 million, while in Q1 2021, the figure rose further to [over 50%](. Now that international travel has slowly opened up, the travel insurance subsector is [eyeing lofty targets]( for 2022 as well. It’s inevitable that this industry-wide tailwind will also benefit insurtech startups, [three of which]( raised a collective US$70 million in funding last week. Qoala took home a bulk of that sum - US$65 million - but [Aman]( and [Aigis]( two relative newcomers, also raised fresh cash. Perhaps one development that may dampen some of the optimism is the recent trend in the US insurtech space. Over the past few months, several players have seen a [severe market correction]( after much-heralded IPOs. One of them, car insurance provider Metromile, saw its share price plummet from an almost US$20 high in February 2021 to just US$2 as of January 2022. In November last year, the firm was [acquired]( by fellow insurtech company Lemonade - which has similarly struggled to gain a [sizable foothold]( on the US homeowners’ insurance market. But in this respect, insurtech is perhaps similar to fintech in that the developed vs. developing markets inhabit different realities. In markets like the US, Europe, or Australia, for instance, buy now, pay later (BNPL) schemes are a way to attract younger consumers who have different spending habits. In emerging markets, however, BNPL serves a more fundamental need: a bridge to include millions of consumers who have never participated in the financial ecosystem. The same seems to apply to insurtech. According to [Swiss Re Institute]( insurance premiums in Indonesia make up just 1.9% of gross domestic product in 2020. That’s less than a third of the global average of 7.4%. It’s telling that aside from bread-and-butter products, Indonesia’s insurtech offerings are tailored to local needs. These include microinsurance, where consumers can receive life or health protection from just US$0.56 per month, to products that help ride-hailing drivers protect their mobile phones. The two newer players, Aman and Aigis, however, operate a somewhat distinct model: positioning themselves as an employee health benefits platform (with software-as-a-service features) while targeting Indonesia’s many SMEs and startups. It’s a new model for Indonesia, but it does have precedence in other markets. ​​In India, a similar startup called Plum raised US$15.6 million in 2021 from a host of investors including Tiger Global. Brazil counterpart Pipo Saude also raised a US$20 million round last year. Plus, if [bookkeeping apps]( are any indication, you can’t go wrong by targeting the fast-growing MSME space - the backbone of Indonesia’s economic activity. – Putra  NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the fintech scene [here](. 1️⃣ [Malaysia fintech association picks PolicyStreet co-founder as president]( Wilson Beh, co-founder of the insurtech startup, will serve in its 2022-2023 committee. 2️⃣ [B Capital co-leads $2.8m round of Indonesian personal finance app]( Other participants in Finku’s seed round are Global Founders Capital and Trihill Capital. 3️⃣ [Sequoia backs $65m round of Indonesian insurtech firm]( Qoala’s US$65 million series B round is led by France-based investor Eurazeo and also joined by MassMutual Ventures. 4️⃣ [Investree acquires stake in Indonesian digibank]( The fintech lender gained an 18.4% minority stake in Amar Bank, an Indonesian commercial and digital bank backed by Singapore-headquartered conglomerate Tolaram. 5️⃣[Coinbase halted India service due to ‘informal pressure’]( The company’s co-founder and CEO Brian Armstrong says there are “elements” in the Indian government - including from the Reserve Bank of India - who “don’t seem positive” on crypto. 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 next week! P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2022 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894