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Indonesian e-wallet player Ovo to expand its financial offerings, president director says

OVO will offer investment products, given that the payments market is now mature.

Indonesian e-wallet unicorn Ovo will further expand into the financial services market, offering products that range from peer-to-peer (P2P) lending to investment products, said its president director on Friday.

Karaniya Dharmasaputra, who is also the co-founder and CEO of financial marketplace Bareksa, says the company is planning to introduce a money market fund, as well as more lending services on the Ovo platform. These products, he added, will be introduced next year.

While he said that the growth of e-money usage and transaction volumes has been “extraordinary”, he also highlighted that Indonesians only use fintech payment platforms for their consumptive needs. Meanwhile, he added, there are more opportunities to bring financial products to customers, so that these platforms are also used for investment purposes.

“Some Ovo users are still unbanked or underbanked. We can introduce financial products to these segments by offering the money market fund on our platform,” Dharmasaputra told KrASIA.

Based on the 2019 Google-Temasek-Bain & Co report, Indonesia’s population comprises 92 million unbanked, 47 million  underbanked, and 42 million banked adults.

He believes that Indonesia’s digital landscape could replicate China’s success story of eight or nine years ago, when synergy between e-commerce, e-wallet, and e-investment players such as Alibaba, Alipay, and Yu’e Bao, occurred.

“Today, Indonesia’s digital landscape has two big waves of growth through e-commerce and e-money transactions. This is similar to the Chinese landscape ten years ago. The penetration of banks was small and there were few credit card users. Hence, fintech  created a change, mainly in its investment sector. With the synergy of e-money, e-commerce, and investing, there was a fundamental landscape change in China,” Dharmasaputra explained.

To offer the money market fund, Ovo is being supported by Bareksa, which was reportedly acquired by OVO in April 2019. Dhamasaputra confirmed that Ovo is a shareholder of Bareksa, but declined to disclose how much of a stake it has in the marketplace.

For two years now, Bareksa has partnered with e-commerce platforms to tap new segments. It allows underbanked people to invest in mutual funds in small denominations, starting at IDR 10,000 [USD 0.71]. This is aimed at increasing the local retail investor base.

Indonesia’s investment market is sustained by foreign investors and institutional investors. The Indonesia Central Securities Depository (KSEI) stated that as of the first half of 2019, Indonesia’s retail investors had reached 2 million people from its 264 million country population.

Dharmasaputra also stated that Ovo plans to offer a financing service focused on supply chain lending in the future. It is aimed at providing loans to micro and small medium enterprises (MSMEs), mainly those from the Grab and Tokopedia ecosystems. Examples of MSMEs are agents under GrabKios and Mitra Tokopedia, the offline programs run by Grab and Tokopedia, respectively.

Ovo recently launched a micro lending service for merchants, after the e-wallet firm acquired local P2P lending startup Taralite in March 2019.

Ovo was founded by Indonesian conglomerate Lippo Group, which also has a stake in ride-hailing firm Grab. OVO is the second largest digital wallet player in Indonesia after Gopay, based on an iPrice Group ranking that looks at monthly active users. Besides GoPay, it competes with Ant Financial-backed Dana, Indonesia’s state-backed LinkAja, and private lender BTPN’s Jenius.