Indonesia's multi-finance landscape has undergone significant transformation in recent years, with the emergence of digital-first financing companies challenging traditional players.
This article explores the dynamics of the multi-finance industry in Indonesia, shedding light on major companies, growth patterns, and factors influencing change. It examines the obstacles affecting profit expansion, the sector's continuous stability, and the process of market consolidation.
Moreover, it explores the emergence of new digital multi-finance players and their innovative strategies in providing consumer credit, such as Buy Now Pay Later (BNPL) and digital credit services.
Traditional vs. Digital Multi-Finance Institutions
Key Players and Market Positioning
Indonesia’s multi-finance companies (perusahaan pembiayaan) play a crucial role in consumer and SME financing outside the banking sector.
As of 2022, there were around 153 licensed finance companies.
Major Traditional Players in Multi-Finance:
These companies dominate the auto and motorcycle financing sector, which accounts for 60% of the total multi-finance portfolio.
Growth Trends
The multi-finance sector experienced recovery and moderate growth in 2022, rebounding from the pandemic-induced slump.
Key Financial Metrics
While total assets increased to IDR 488 trillion in 2022, this figure remains 5.8% below pre-pandemic 2019 levels.
New financing disbursements have also rebounded, reaching IDR 215.4 trillion in 2022, up from IDR 206.9 trillion in 2021. However, this remains below the 2019 level of IDR 274.8 trillion.
Factors Driving Growth
- The recovery in automotive sales has played an important role in driving financing demand.
- Multi-purpose loans have expanded, further contributing to growth.
- The 2014 OJK regulation allowed a broader range of loan types beyond traditional leasing. This includes multi-purpose financing, refinancing, and infrastructure financing.
Challenges Impacting Profit Growth
- Profit growth has been under pressure due to higher provisioning for credit quality. The non-performing financing (NPF) ratio reached approximately 2.7% in December 2024.
- Accounting rule changes have required increased provisioning, impacting profitability.
Sector Stability & Market Consolidation
- The sector remains stable, supported by a growing middle class and government efforts to boost financial inclusion.
- Over 20 million customers have been served, and total financing outstanding is projected to exceed IDR 500 trillion by 2024.
- Consolidation is underway in the industry. No new licenses are being issued, and some licenses have been revoked as weaker players exit. More substantial firms are now focusing on scaling their operations to remain competitive.
Digital Multi-Finance Entrants
A new wave of digital-first financing companies has emerged, often in the form of fintech-driven multi-finance or “tech finance” firms.
Key Players in Digital Multi-Finance
Growth and Scaling Strategies
- BNPL providers like Kredivo and Akulaku operate under multi-finance licenses and have become major players in consumer credit.
- Kredivo, supervised by OJK’s multi-finance division, can offer instant e-commerce installment loans and personal loans to retail borrowers.
- Akulaku, backed by Ant Group, focuses on digital credit for e-commerce and cash loans. The company has scaled rapidly through e-commerce partnerships, disbursing around IDR 4 trillion (~$285M) in Jan–Oct 2019 and setting a target of IDR 6 trillion in 2020.
- Point-of-sale financing for electronics and other products has been digitalised by Home Credit Indonesia, a multinational consumer finance company that frequently bundles lending into mobile apps.
Digital Transformation Among Incumbents
- Traditional multi-finance companies are also embracing digitalization.
- Many have launched mobile apps for loan applications.
- Several have partnered with online marketplaces to expand digital financing offerings.
Regulatory and Industry Support
- OJK and industry associations encourage collaboration with fintech lenders and digital banks.
- The goal is to help traditional multi-finance firms stay competitive in the evolving digital finance landscape.
All parties compete for Indonesia's huge unbanked market, and the multi-finance landscape is a mix of established lenders that specialise in auto/consumer durable financing and flexible digital lenders that are branching out into multipurpose loans and BNPL.
Peer-to-Peer (P2P) Lending Market
Overview and Major Players
Indonesia’s P2P lending sector has grown into one of the largest in ASEAN, bridging credit access for underserved consumers and MSMEs.
Key Statistics:
- 102 licensed P2P platforms were registered with OJK as of mid-2023 (down from a peak of ~150 due to stricter licensing).
- Major P2P players include:
Some platforms are backed by large tech or financial groups:
- Danamas is affiliated with Sinarmas.
- AdaKami is backed by Akulaku’s parent company (Chinese fintech).
- Kredivo launched initially under a P2P license before shifting to a multi-finance model.
These platforms connect retail and institutional lenders with borrowers through online marketplaces, offering personal loans, invoice financing, micro-loans, and business loans.
Loan Volumes and Growth
P2P lending in Indonesia has achieved remarkable scale in a short time.
Key Loan Statistics
The majority of fintech loans were initially consumption-based (personal loans).
As of August 2023, about 60–61% of disbursements were to non-productive segments.
However, there is a gradual shift towards productive lending, which includes SMEs, agriculture, and education, as platforms continue to mature.
Loan Size Variability
- Small payday-size loans: These can range from just a few hundred thousand rupiah.
- Larger invoice or business loans: These loans can reach hundreds of millions of rupiah and are typically facilitated by SME-focused platforms.
Regulatory Developments
The Financial Services Authority (OJK) has implemented a robust regulatory framework for P2P lenders under POJK 77/2016 and updated circulars.
Key Regulatory Changes
Interest Rate and Fee Caps:
- In late 2023, new regulations introduced limits on the total amount of interest and fees that P2P lenders are allowed to charge borrowers.
- Consumer P2P loans are capped at approximately 0.3% per day (all-in) in 2024, with a gradual reduction to 0.1% per day by 2026.
- Stricter interest caps apply to consumer loans compared to productive MSME loans, with the aim of preventing predatory lending practices that have troubled the sector in the past.
Operational and Compliance Requirements:
- P2P platforms are required to improve credit scoring mechanisms to better assess borrower risk.
- Platforms must publish performance metrics to increase transparency.
- Platforms must strengthen data security measures to protect users.
- The minimum paid-in capital requirement for fintech lenders was increased from IDR 2.5 billion to IDR 25 billion.
- Foreign funding sources are gradually being restricted in favor of encouraging greater participation from local funding sources.
Enforcement Actions:
- Each year, dozens of illegal or unlicensed lenders are shut down by a joint task force.
- Even licensed players are closely scrutinized for compliance with governance regulations.
- By Q3 2024, OJK identified a small number of licensed fintechs that had yet to meet the new equity requirements and urged industry consolidation to ensure sustainability.
Default Rate Management:
- The industry’s 90-day default ratio (TWP90) stood at around 2.6–3.5% between 2023 and 2024, a figure that is comparable to non-performing loan (NPL) ratios in traditional banking. This demonstrates that P2P lenders have been actively improving risk management and cleaning up high-risk loan portfolios.
Overall, Indonesia continues to have the biggest P2P lending market in ASEAN.
The emphasis is moving towards more productive business lending and increased integration with the official financial system under stricter regulatory control.
Market Trends
Several key trends are shaping the P2P lending market in Indonesia:
Increasing Institutional Funding
- Many P2P lending platforms are now attracting capital from banks, mutual funds, and corporations, in addition to traditional retail lenders.
- This institutional funding helps platforms scale their loan books more efficiently.
Expansion of Shariah-Compliant P2P Lending
- To cater to the demand for Islamic financial products, approximately 7 out of the 101 licensed platforms are Shariah-based as of 2024.
Growing Partnerships with Digital Ecosystems
- P2P lenders are increasingly collaborating with e-commerce platforms to provide financing for online merchants.
- Some platforms are partnering with ride-hailing companies to offer financing for drivers.
- These collaborations are leading to a blurring of the lines between P2P lending and other fintech verticals.
Shift in Industry Priorities from Growth to Profitability and Compliance
- OJK reported that as of August 2024, the fintech lending industry earned approximately IDR 656.8 billion (approximately $44 million) in profit.
- Investors are increasingly pressuring fintech lenders to achieve sustainable margins rather than focusing solely on rapid growth.
The P2P lending sector in Indonesia has shown to be a successful avenue for financial inclusion despite some initial difficulties.
With technology-driven financial solutions that cater to borrowers who are typically ignored by traditional banks, the industry is continuing to grow while addressing credit gaps for consumers and SMEs.
FinTech Lending and Payments Landscape
Lending FinTechs
Beyond the P2P platforms, Indonesia has a variety of fintech lenders and credit services.
BNPL (Buy Now, Pay Later) has become one of the fastest-growing segments, fueled by the e-commerce boom.
Leading BNPL providers Kredivo and Akulaku have amassed millions of users by offering instant installment plans at online checkouts and via mobile apps.
These services target the underbanked youth who have no credit cards – over 50% of Indonesians are unbanked, so BNPL serves as an "alternative credit" for first-time borrowers.
Leading BNPL Providers and Market Size
Notable Lending FinTechs
Consumer Loan Apps:
- Julo
- Investree’s NeoBank
- Finmas
- Danacadabra
Bank-Linked Digital Lenders:
- Tunaiku (Amar Bank)
- Jenius’s FlexiCash (BTPN)
Many of these started as pure fintech startups and have since obtained regulatory licenses or bank partners to operate.
Regulatory Approaches in Lending FinTechs
Competition in fintech lending is intense, driving innovation in credit scoring (using smartphone data, e-commerce history, etc.) and product variety – from invoice financing for SMEs to micro BNPL for ride-hailing fares.
Crucially, fintech lenders are often quicker in approvals (sometimes in minutes) and more flexible terms than traditional banks, though at higher interest rates to cover risk.
This has opened up credit access for segments such as gig workers, online merchants, and rural customers.
Payments FinTechs
Indonesia’s fintech revolution was initially dominated by payments.
The country now has several large e-wallet and digital payment platforms that are household names:
Major E-Wallet and Digital Payment Platforms
Adoption and Growth Trends
- E-money transaction value reached IDR 399.6 trillion in 2022, growing 30.8% from the previous year.
- By 2023, Bank Indonesia recorded around 7.7 billion e-money transactions annually, and QR code payments (via the standardized QRIS system) hit IDR 98.5 trillion in value in 2022.
- Fintech payment firms have built enormous user bases (tens of millions of active users each) and merchant networks (over 22 million QRIS merchants as of 2022).
Expansion Beyond Payments
Notably, these payment fintechs often started with a single service (wallet or recharge) but have expanded into broader financial services – including lending, as discussed below, but also investments (e.g., mutual funds in OVO/GoPay apps), insurance, and more.
Bank Indonesia (BI) regulates the payments side (e-money licenses, switching, etc.), pushing interoperability and risk management.
The payment fintech landscape also includes payment gateways and processors (Midtrans, Doku, Xendit) and remittance fintechs, but consumer wallets garner most attention due to their scale and integration into daily life.
Integrated Services (Lending + Payments)
A clear trend in Indonesia’s fintech landscape is the convergence of lending and payment services within single platforms or corporate groups.
Notable Converged FinTech Services
Meanwhile, some fintech lenders have added payment-like services:
- KoinWorks, initially a P2P lender, launched a Neobank feature (after securing a banking license partnership) so that customers can hold balances and make transactions, blurring the line between a loan app and a digital bank.
- Even merchant-focused fintechs are in on the mix; for instance, Cashlez and Kredivo’s partnership with offline merchants allows providing credit at the point of sale.
The Rise of Super-Apps
The convergence is also driven by “super-app” ecosystems where Indonesia’s tech giants are integrating fintech vertically.
- Gojek-Tokopedia (GoTo Group) combines e-wallet, e-commerce, ride-hailing, and fintech lending (through partners) under one umbrella, leveraging cross-platform data.
- Grab and OVO (and their investment in Bank Fama) similarly aim to offer rides, food, payments, insurance, and credit in one app.
This integrated approach increases user stickiness and opens multiple revenue streams.
Fintech startups and incumbents alike see value in offering a one-stop financial experience: customers can pay, save, and borrow on the same platform.
Regulatory Coordination
Importantly, regulators BI and OJK coordinate to some extent – BI regulates payments fintech, OJK regulates lending and now digital banks – to ensure these intertwined services remain safe and interoperable.
The overarching fintech landscape in Indonesia is thus characterized by a rich diversity of players but also a convergence of services, as lending and payment functionalities increasingly intermingle to meet consumer needs in a seamless digital journey.
Convergence Trends: Merging of Lending and Payments
The merging of lending and payment fintechs in Indonesia are quickly gorwin through partnerships, strategic investments, and new business models.
Several noteworthy convergence trends include:
Platform Partnerships
Fintech lenders frequently partner with payment and e-commerce platforms to embed credit at the point of use.
Examples of Platform Partnerships
These partnerships marry the reach of payment platforms (which have large user bases making transactions) with the credit expertise of fintech lenders, creating a win-win: higher sales conversion for merchants and convenient credit for consumers.
Super-App Ecosystems and Embedded Finance
Indonesia’s super-apps are embedding financial services deeply:
- Gojek: Offers GoPay e-wallet, GoPayLater, insurance, and investment features; integrated with Bank Jago, allowing users to manage a bank account within the app.
- Grab (through OVO): Offers PayLater, with linkages to LinkAja and other financial products.
- Shopee (Sea Group): Integrates ShopeePay with SeaBank, enabling seamless top-ups and credit access.
The BNPL integration into super-apps is expected to deepen, with industry observers anticipating installment options for:
- Ride-hailing
- Food delivery
- Bill payments
This convergence is fueled by the desire to increase user lifetime value and monetize large user bases via financial services.
Mergers and Acquisitions (Fintechs Acquiring Banks)
One of the most striking trends is fintech companies converting into or acquiring banks, effectively merging lending, payments, and savings under one roof.
Key Fintech Bank Acquisitions
These acquisitions allow fintechs to:
- Fund loans with bank deposits
- Offer payment accounts
- Operate under a bank license, providing regulatory sturdiness and access to cheaper capital
On the flip side, traditional banks must innovate or partner with fintechs to retain market share.
Some non-bank financial institutions (FIs) are consolidating, with multi-finance firms partnering with fintech startups for digital distribution and data scoring, while others are being acquired outright by tech firms seeking lending licenses.
Unified Financial Services & Neobanks
The convergence is giving rise to neobanks and all-in-one financial apps.
Notable Digital and Fintech-Backed Banks
These examples illustrate a blurring of boundaries – a fintech can be a lender, a payments provider, and now a bank.
Regulatory Impact
Regulators have generally supported convergence, seeing it as an opportunity to broaden financial inclusion, but they maintain clear licensing requirements.
Key Regulatory Measures
Regulation is adapting to convergence by tightening oversight while encouraging innovation.
The Digital Financial Innovation Roadmap 2020-2024 envisions a cohesive fintech ecosystem.
The Rise of Hybrid Business Models
The merging of lending and payments in Indonesia has led to hybrid business models, where fintechs offer multiple financial services within the same platform.
Examples of Hybrid Models
- Kredivo: Now offers a PayLater card usable offline, bridging into payments.
- OVO: Expanding into investment products, moving towards being a financial supermarket.
Traditional banks collaborating with fintechs:
- BRI partners with Traveloka for PayLater financing.
- CIMB Niaga funds consumer loans on Kredivo’s platform.
Future of Convergence
The convergence trend is likely to continue, with super-apps, digital banks, and fintech lenders increasingly indistinguishable to consumers.
The outcome could be a more inclusive financial sector, where:
- A user’s journey from making a payment to getting a loan is seamless.
- Multiple licensed entities coordinate behind the scenes to facilitate smooth financial transactions.
As the fintech landscape evolves, the merging of lending and payments will reshape Indonesia’s digital financial ecosystem, offering greater accessibility, efficiency, and integration for consumers and businesses alike.
Market Size and Performance Metrics
To summarize the market by the numbers, here are key metrics and trends across Indonesia’s multi-finance, P2P lending, and fintech sectors (with the latest available data):
Multi-Finance Industry Size
The industry has rebounded close to pre-COVID levels, showing moderate consolidation.
Loan Disbursement Volumes (Multi-Finance)
Breakdown by Segment:
- Consumer Vehicle Loans (~60% of total financing)
- Other Consumer Financing (electronics, appliances, etc.)
- Leasing (heavy equipment)
- Multipurpose Loans
Car financing saw significant growth in 2023, with some firms reporting 20–25% YoY increases.
P2P Lending Volumes
Around 39% of fintech loan value now goes to productive purposes (SMEs, etc.), a growing trend encouraged by OJK.
Digital Payments Usage
Top e-wallets (GoPay, OVO, DANA, ShopeePay, etc.) have seen continuous growth, driven by e-commerce and retail digitization.
BNPL and Digital Credit Market
Key Players:
- Kredivo (Claims one of the lowest interest rates and high repeat usage)
- Akulaku (Multi-million customer base)
Investment Trends:
- Kredivo: Raised ~$170 million in equity (2021–2022), secured large debt financing
- Akulaku: Raised $100 million from Ant Financial (2019), $200 million from MUFG (2022)
- Total Fintech Investment in Indonesia (2022): ~$1.4 billion (slightly down from $1.5 billion in 2021)
- Majority Funding Went to: Payments and lending startups
Fintech IPOs & SPACs:
- Akulaku & Kredivo: Considering public listing (Kredivo via a NASDAQ SPAC merger, ~$2 billion valuation)
- GoTo & Bukalapak: Already public, with substantial fintech operations
Market Share and Growth Rates
- Key Fintech Segments: Initially led by payments, now dominated by lending fintechs (P2P, BNPL) alongside wealth tech.
- Bank Lending Growth: 8–12%
- Fintech Credit Growth (P2P, BNPL): 20–30% (from a smaller base)
Financial Inclusion Trends:
- World Bank (2020): 51% of adults had bank accounts
- Government Target (2024): 90% financial inclusion
Conclusion
Indonesia's financial sector is undergoing a digital transition.
Traditional multi-finance institutions remain important, but are being supplemented (and challenged) by digital-native lenders and fintech platforms.
Key trends include:
- Lending and Payments Convergence: Super-apps, fintech-bank partnerships, BNPL integration
- Rapid Digitalization: Faster loan approvals, seamless digital transactions
- Industry Consolidation & Collaboration: Fintechs teaming up with or evolving into banks, traditional players aggressively digitizing
All indications are that Indonesia's digital lenders, multi-finance firms, and payment fintechs will increasingly collaborate to shape a modern financial services sector that will serve tens of millions of Indonesians in the coming years.
Sources:
- Otoritas Jasa Keuangan (OJK) – Indonesia’s Financial Services Authority (P2P Lending | Multi-Finance). Publishes statistics on P2P lending and multi-finance sectors.
- Bank Indonesia (BI) – Central Bank (E-Money & Payment Systems). Reports on e-money, QRIS, and payment ecosystem trends.
- Asosiasi Perusahaan Pembiayaan Indonesia (APPI) – Finance Companies Association. Industry reports on multi-finance market size and portfolio quality.
- Asosiasi Fintech Pendanaan Bersama Indonesia (AFPI) – P2P Lending Association. P2P guidelines, market updates, and default rates.
- Google, Temasek & Bain – e-Conomy SEA Reports – Key insights into Southeast Asia’s digital economy and fintech market.
- BCG – Indonesian Fintech Market Insights – In-depth reports on financial services, lending, and payment trends.
- Fitch Ratings – Indonesia Financial Institutions Reports – Analysis on non-bank financial institutions (NBFIs), banks, and fintech lenders.
- Statista – BNPL & Digital Payments – Market data on BNPL, e-wallets, and P2P lending.
- Fintech News Indonesia – Coverage of Indonesia’s fintech landscape.
- DealStreetAsia – Reports on fintech deals, funding, and M&A.
- Kredivo (FinAccel) – BNPL services, credit terms, and e-commerce partnerships.
- Akulaku – Multi-finance operations and pay-later solutions.
- Investree – P2P lending for SMEs, focusing on invoice financing.
- Modalku (Funding Societies) – MSME P2P lending platform with investor and borrower insights.
- Amartha – Micro-lending for rural female entrepreneurs.
- KoinWorks – SME & personal lending, expanding into neo-banking.
- Gojek / GoTo Group – GoPay, GoPayLater, and financial services via Bank Jago.
- OVO – Major e-wallet provider, offering PayLater and fintech investments.
- ShopeePay / Sea Group – BNPL via SPayLater, integrated with SeaBank.
- Bisnis Indonesia – Comprehensive fintech and banking coverage.
- The Jakarta Post – English-language financial and economic news.
- Kontan – Business portal covering multi-finance, digital banking, and investment.
- CNBC Indonesia – Market data, fintech interviews, and industry trends.
- Asian Development Bank (ADB) – Studies on microfinance, SMEs, and fintech’s role in financial inclusion.
- World Bank – Indonesia Financial Sector Studies – Reports on financial inclusion and digital banking.
- CGAP – Digital Lending & Financial Services – Global insights on micro-lending and consumer protection.
Disclaimer Notice
This page is provided for general informational purposes only and does not constitute legal, financial, or investment advice. Please refer to our Full Disclaimer for important details regarding eligibility, risks, and the limited scope of our services.
