Investments became a luxury item a few years ago. Various investment products or instruments, such as mutual funds, were originally only accessible to exclusive groups. However, the current conditions are much more democratic. Anyone can be an investor anytime and anywhere.
IDX and Central Custodian data showed that the number of mutual fund investors in Indonesia grew 78% YoY in 2020 to 3.2 million. This growth was contributed primarily by millennials, who accounted for 92% of the new investors. In the first Quarter of 2021, more than 1 million new mutual fund investors came to the market.
However, only 2% of its total productive-age population has entered the capital market. The participation rate is relatively low compared to other emerging countries in Asia. Indonesia’s mutual fund industry is still in the early stage and has a big room for growth.
“In the investment sector, many young Indonesians use technology to have easy access to learn about investment, how to be a new investor. The growth number is predicted to continue growing until the end of the year,” said Pandu Sjahrir, Founding Partner of AC Ventures & Commissioner of the Indonesian Stock Exchange.
The presence of technology players in the investment sector, such as Bibit, opens the way for young investors to grow. From the very beginning, Bibit had aspirations to democratize the capital market. Bibit wants investment to be inclusive so that everyone can enjoy economic growth by increasing welfare.
“Previously, the capital and stock market was seen as an intimidating place to invest. Bibit is leveraging technology to make investing accessible to everyone, including first-time investors. Therefore, we are seeing an accelerated interest from retail investors into the capital market,” explained Sigit Kouwagam, CEO of Bibit.id.
Breaking the old paradigm of investment
There are four general paradigms inherent in Indonesian society in investing in the capital market.
Based on market research that Bibit found, investing in the capital market is often considered a scary thing. The process is not easy, exclusive to those already established and understand the investment, and is not easily accessible.
Therefore, Bibit is present as a mutual fund Robo-advisor platform with a business model that allows investors to invest in an easy, fast, safe, affordable, and accessible way for all.
Bibit helps Indonesian investors to have a portfolio according to their risk profile and investment objectives more efficiently and optimally. Bibit makes investing easy for millennial investors with no experience who make up 90% of Bibit users.
Through technology on the Bibit platform, users can invest properly, namely balancing investment targets with their respective risk profiles and diversifying assets for more optimal results.
“Our aspiration is that everyone, starting from those who only have IDR 10,000 or IDR 100,000,000, has the same opportunity to be able to invest in the same instrument, generate the same return, and get the same quality of service,” said Sigit.
In line with the growing investment trend in the community, especially the younger generation, Bibit continues to innovate and create added value.
For example, Bibit collaborates with Bank Jago to purchase mutual funds at Bibit using Jago. This innovation is Bibit’s effort to answer the needs of millennial customers who are digital-savvy.
These generations always favor fast, simple, safe, and efficient services. Simple and fast is reflected in the ability to complete transactions without having to switch applications. Moreover, transactions can be done automatically and on a scheduled basis. “The more seamless, the more favored by millennials,” said Sigit.
Supported by an increasingly mature ecosystem
Since its launch in 2019, Bibit’s performance has continued to show a good stretch. From Sigit’s observation, several factors support Bibit’s positive performance, including:
- Right timing
Bibit emerged during digital technology disruption that occurred in almost all sectors. As a result, Bibit’s task of educating the market about digital technology has been helped by other technology startup players. On the other hand, the COVID-19 pandemic has also accelerated the process of adopting technology in society.
Customer behavior that has changed towards digital has made it easier for Bibit to market their investment products and services and facilitate the need to invest in Indonesia.
- Changes in millennial consumer behavior
Before the pandemic, the average millennial generation allocated their money to travel to various destinations, and then this behavior has changed since the mobility restriction policy was implemented. Millennials and Gen Z have also shifted the allocation of their travel funds to invest.
- Relatively low bank interest rates
According to Sigit, these days, bank interest rates are relatively low, making deposits less attractive. The deposit interest rate is almost the same as inflation. As a result, customers choose to look for other investment instruments that are promising and safe with higher returns, such as mutual funds.
- e-KYC solution
e-KYC makes it easier for Bibit to grow its business. If previously the Know Your Customer (KYC) regulation had to be done face-to-face and was limited to branch offices for priority customers, now it can be done digitally and in real-time.
“And this is the result, a digital mutual fund platform (Bibit) that helps novice investors to start investing. An investment platform built on the belief that everyone deserves a better future. This great aspiration can be realized by utilizing technology,” added Sigit.