Challenges in Entering Indonesia’s Fintech Market

Indonesian Fintech Market Challenges

Indonesia’s burgeoning fintech landscape offers immense opportunities for innovative financial solutions, but entering this market is not without its complexities. In this article, we will delve into the challenges that fintech companies may encounter when seeking entry into Indonesia and explore strategies to overcome these hurdles.

The fintech industry in Indonesia has experienced a dynamic transformation, initially centered around advancements in online payment solutions. It has expanded its scope to encompass various vertical industries, penetrating untapped markets in tier 2 and tier 3 cities. Additionally, the sector has addressed the distinct financial requirements of emerging startups within the ecosystem. This evolution underscores the flexibility and diverse innovations that characterize Indonesia’s fintech landscape.

The inception of fintech in Indonesia was marked by a primary focus on facilitating online payments in response to the surge in online transactions and the growth of technology companies.

Challenges of Entering the Indonesian Fintech Market

Despite the opportunities, there are also several challenges that foreign fintech companies need to be aware of when entering the Indonesian market. These challenges include:

  1. Regulatory Uncertainty: The Indonesian fintech regulatory landscape is still evolving, which can make it difficult for foreign companies to comply with all the regulations.
  2. Competition: The Indonesian fintech market is already quite competitive, with both domestic and foreign players. This means that foreign companies will need to have a unique value proposition to be successful.
  3. Talent Acquisition: Finding qualified talent in Indonesia can be difficult, especially for specialized roles such as data scientists and software engineers
  4. Infrastructure Challenges: Indonesia’s digital infrastructure is still developing, which can lead to issues such as slow internet speeds and unreliable power supplies.
  5. Overarching Challenge: A short-to-medium-term concern is the rising cost of funds due to the prevailing high-interest rate environment. The rising cost of funds is putting pressure on fintech companies’ margins.

Key takeaways for market entrants in the fintech sector

The fintech world is a thrilling maze, packed with opportunities and pitfalls. To avoid getting lost, new market entrants or founders need to equip themselves with essential knowledge and agility. Here’s a breakdown of crucial hurdles to anticipate:

  1. Recognize the Importance of Regulatory Awareness: The fintech industry is subject to heavy regulation. Thus, it is crucial for market entrants to familiarize themselves with licensing roadmaps and the perspectives of regulators.
  2. Explore the Intricacies of the Fintech Sector: The fintech sector is characterized by its dynamic and multifaceted nature. New entrants must be aware and must dedicate time to comprehend its intricacies in order to make well-informed decisions.
  3. Prioritize Regulatory Knowledge Across Multiple Markets: Beyond ensuring compliance, comprehending regulatory developments in various markets aids founders in anticipating future challenges. The speed of response to regulatory changes has been observed to shape the future trajectories of companies in the same sector. Strategic planning and proactive execution are recommended to stay ahead of competitors.
  4. Vigilantly Monitor Take Rates and Plan for the Future: Take rates in payments and acquiring businesses have witnessed a global decline over time. The market no longer accepts high transaction volume or value with negligible take rates. Careful monitoring of take rates and strategic planning for the future, ensuring economic viability, are essential.
  5. Embrace Strategic Long-Term Planning: Considering the evolving nature of take rates, market entrants should integrate potential risks into their mid to long-term strategies. Proactivity and adaptability are pivotal for maintaining a competitive edge.

Additional Tips for Entering the Indonesian Fintech Market

  1. Learn Bahasa Indonesia: While English is spoken in some business circles, learning Bahasa Indonesia will show your commitment to the market and make it easier to communicate with potential customers and partners.
  2. Be Patient: It takes time to build trust and relationships in Indonesia. Don’t expect to see overnight success.
  3. Be Culturally Sensitive: Be mindful of Indonesian culture and customs when doing business.
  4. Be Prepared to Adapt: The Indonesian market is constantly changing, so be prepared to adapt your business model as needed.


Entering the Indonesian market presents a myriad of challenges, but with a strategic and informed approach, businesses can transform these hurdles into opportunities. ASEAN Business Partners can help businesses prioritize cultural sensitivity, staying abreast of regulatory changes, optimizing logistics, and adapting to market dynamics, companies can position themselves for success in the vibrant and promising Indonesian market.

About the Author

Tripudjo Soemarko

Tripudjo Soemarko is the Advisor – Government Relations of our Indonesian subsidiary, Indonesia Business Partners. He is a career banker with over 30 years of work experience at HSBC.