If you’re not a fintech nerd, a simple and brisk definition of the term ‘open finance’ could be that it is a data-sharing model that allows users to share their financial data (not necessarily from a bank, but also from other sources) with third parties.
So, what’s going on with open finance in Indonesia? Jakob Rost, founder and CEO of Ayoconnect, is an expert on the subject because the startup he heads is providing the underlying infrastructure for open finance in the country.
During a recent episode of the Indo Tekno podcast hosted by AC Ventures’ senior advisor and venture partner Alan Hellawell, Jakob addressed specific challenges and opportunities for fintech services in the world’s largest archipelago.
Back in 2016, Ayoconnect started as a platform for payment aggregation. Along the way, it evolved into a platform for open banking. In that capacity, Ayoconnect shares software services it has developed for billing functions by making certain APIs available to third-party enterprise customers.
This makes it simple and cost-effective for banks and other businesses to stay up-to-date with the latest fintech and financial services. In the past, they would have needed to spend hefty sums of money on in-house engineers or third-party vendors. In this sense, Ayoconnect does away with an old paradigm.
More than 100 Indonesian companies are already using Ayoconnect’s API stack, including banks, e-commerce providers, retailers, and e-wallets like Bank BRI, Indomaret, Bank Mandiri, DANA, Bukalapak, Home Credit, and Pegadian.
Ayoconnect also connects more than 1,000 institutions through its API network.
Bolstered by two new rounds of VC funding earlier this year, Ayoconnect has been taking its attention aggressively in the direction of open finance, with plans to move beyond basic banking by developing APIs for additional financial services and offering those APIs directly to customers. The ultimate goal? To turn every business in Indonesia into a fintech company, according to the entrepreneur.
Indonesia’s fintech playing field
“Admittedly, open finance is a very wide field. We are looking at the region of Southeast Asia as a whole. We are looking at open finance. But I think it’s important to note that this is a journey and we need to start somewhere,” explained Jakob. “So as of today, our focus is 100% on Indonesia. It is the biggest country in the region. It has the majority of the population. It is the most advanced, from a tech ecosystem perspective. It has the most unicorns. It has the most funding, and it makes the most noise.”
Also within Indonesia, he indicated, there’s a particular need for an underlying infrastructure and set of services to help tie disparate businesses together and to add new financial services for customers to access quickly and easily. None of the existing banks or unicorns have captured the entire market, said Jakob.
“There will probably never be one company that can serve all of Indonesia, and that’s where you need a lot of players,” he declared, implying that Ayoconnect seeks to one day be the glue that binds them.
Indonesian banks and fintech firms come with different value propositions, Jakob observed. For example, some have focused really well on Muslim populations, and others on urban populations, farmers, GenX or millennials, and others.
He added, “Collectively, that’s how you capture a lot of the market. But then you need access to financial solutions and embedded services, and that’s where you need the right infrastructure and APIs. That’s where we are today.”
Invest with us
AC Ventures is a leading venture capital firm investing in early-stage startups focused on Southeast Asia. We are a generational partner to founders driving positive environmental, societal, and economic impact. If your institution seeks to deploy smart capital in the market, please get in touch.