Jakarta. Technology-based payment services company OVO, which forms part of the Lippo Group, sees ample room for expansion in Indonesia to complement conventional banks.
Established more than a year ago, OVO currently facilitates 4 million digital transactions per month with a total value of Rp 1 trillion ($74 million) to hospitals, restaurants, department stores, schools, transportation services and toll road operators.
In comparison, Indonesian banks facilitate more than 550 million transactions per month, which in October amounted to Rp 496 trillion. The value of these transactions, including cash withdrawals, purchases and money transfers, increased 11 percent year on year, according to latest central bank data.
Johnny Widodo, a director at OVO, said tech-based financial services can serve customers at a fraction of the cost compared with traditional banks. And in the digital era, information on these services can be easily obtained, leveling the playing field for banks and financial technology companies to compete.
"In the past, there was asymmetric information. Now you no longer have that; everyone can access information easily. How many times these days you go to a bank counter? The frequency must decrease and it will create room for fintech players," Johnny said during an interview in Jakarta on Friday (15/12).
"And indeed, there are some tasks in which fintech players cannot replace banks. For example, collecting money on the grassroots level through traditional methods, such as offline face-to-face services to customers. This task cannot be performed by fintech companies.
"Today's demand has created a climate in which banks and fintech companies must cooperate. I am seeing it more as a collaborative function," Johnny said.
He said OVO employs emerging financial technologies that provide customers with new ways to go about their lives.
"We want to be as close as possible to the people. In the future, whatever our users do, OVO will be there alongside them," Johnny said.
He added that OVO has already attracted 7 million users who can currently perform transactions at 20,000 merchants in 75 cities. The company seeks to double the number of customers next year.
"I expect to have tens of millions of new users by the end of 2018. This target is feasible enough, otherwise you would not survive in this industry," Johnny said.
"We want to be the number-one fintech player in Indonesia," he added.
Competition however, is tight. Go-Jek Indonesia, the country's first online-based ride-hailing service, has expanded its digital payment service with the acquisition of offline payments processing company Kartuku, online payment gateway Midtrans, and savings and lending network Mapan. This will increase Go-Jek's transaction capacity to around $5 billion per year.
Still, OVO has designed a plan to also expand its services next year.
"We are currently looking at expanding our service to most toll roads in the country and a deal has been reached with Nobu Bank, which has the rights for several toll roads," Johnny said.
"The prospect is there; we want to build an ecosystem that covers geographic resonance with our financial services," he said.
"When you say financial services, it can be anything, the sky is the limit," he added, referring to OVO's plan to become a player in e-commerce, mutual funds, insurance and loan services.
The Jakarta Globe is affiliated with the Lippo Group.