Indonesia’s super app Gojek on Wednesday announced that it will re-focus its management team on two businesses—’Gojek’ and financial services—a move that is part of the firm’s attempt to ramp up growth.
The co-CEOs Kevin Aluwi and Andre Soelistyo will directly oversee the business lines from January 1. Aluwi will focus on Gojek’s services, such as ride-hailing and delivery, while Soelistyo takes care of digital payments and financial services, including GoPay and ‘Pay later,’ along with the B2B and merchant-related services.
“We saw that the two major business portfolios, along with digital and financial payment services, have grown increasingly large, and each portfolio requires different skills and focus,” the co-CEOs said in a joint statement. In 2020, the company raked in USD 12 billion in annualized gross transaction value (GTV), a 10% increase from the previous year. All product lines are generating positive margins, the firm said.
GoPay’s current CEO Aldi Haryopratomo will leave the company in early 2021. He will be replaced by COO Hans Patuwo. Even though Gojek didn’t release a revenue breakdown, GoPay transactions and its pay-later service saw a threefold increase. Since 2018, financial services contribute the most to the firm’s GTV.
Bhima Yudhistira Adhinegara of the Institute for Development of Economics and Finance said that GoPay is the major source of Gojek’s revenue right now, as ride-hailing services are badly hit by the pandemic. “Income from GoPay could be considered as a substitute of lost income from ride-hailing,” he told KrASIA.
GoPay is likely feeling the heat from other e-wallet players, especially those backed by rival Grab, which is currently its closest competitor, together with Lippo Group-backed Ovo. Grab recently also invested in LinkAja, which has a better network in rural areas.
Another notable competitor is Sea Group’s ShopeePay, which managed to rapidly increase user adoption and transactions during the pandemic. Gojek will need to find an untapped area to stay on top. Digital banking might be one.
A possible spin-off?
The groundwork for an entrance into banking has been laid since 2019, when the company reportedly planned to spin out its financial arm into an independent entity called Digital Katalis, or DKatalis for short.
Adhinegara believes that moving into the sector will be good for GoPay. “From an investor perspective, fintech, including digital wallet, is the most attractive sector to invest in right now,” he said. “If GoPay enters the digital banking sector, they could be the dominant player in Indonesia.”
Another possible scenario is that GoPay could become a separate business unit. The relationship between Gojek and GoPay would then mirror that of Alibaba and Ant Financial, where the different units have separate stakeholders.
Soelistyo once mentioned the idea during the 2019 Asia PE-VC Summit. For him, spinning off GoPay makes the most sense, as the business would benefit from a bigger ecosystem, he is quoted by DealStreetAsia. Nevertheless, he also emphasized the importance of having “100% ownership and control” on its diverse business verticals.
Adhinegara considers a spin-off to be positive for GoPay, as it offers more opportunity for the e-wallet to expand. “They could collaborate with more platforms, like e-commerce or digital banking,” he said.