The Dawn of Open Financ(ing) at Indonesia

Timotius Pamungkas
5 min readApr 8, 2021


Disclaimer : This article is my opinion and NOT represents point of view of my current or former employers.

Despite the usual, this is NOT technical article, so feel free to see my other articles if you’re looking for it.

Open banking, open finance (not to be confused with open financing at this article) is a common terms. Some Indonesian large banks already starts those movement. I think, despite the (still) low penetration, this is a good movement for digital banking. A banking world, where physical limitation does not exists, and digital collaboration (or competition) takes place.

Open finance is the next step of digital banking, where financial data become shared commodities (among legally entitled parties of course), and -due to the collaborative nature- provides more accurate data. Which is a mandatory point on risky financial business.

BUT I’m not going to write about open banking, nor open finance here. I’m not sure if there’s a jargon for this, but let’s just say this as as open financing (not to be confused with open finance).

Indonesia has non-banking companies -commonly known as multifinance companies- which operates large amount of money (cumulative on trillion IDR, or equivalent to USD billions). Combined altogethers, top 5 large players consistently produces annual NPAT (net profit after tax) like hundreds millions USD. So yeah, that’s a lot of money. Their business? Give loans to people.

With such amount of money, those companies provides financial access to their employees, and their consumers. While some of the loans might used for non-productive necessity, many of the loans are used for consumer’s business. This means, the productive loan support other employees, and in turns, their families. Not being dramatic here, but even the bankruptcy of one mid-size multifinance companies might affect thousands of people.

Despite the (was, and is) strong financial standing from those non-banking companies, I think a threat is inevitable for them. That is, the rise of digital ecosystem. Not neccesarily a fintech, or banking, but also something else. GoJek starts from ride-hailing, while Tokopedia starts from selling limited items. Now they has loan (pay later features) on their apps. That’s just two giant players, but other players also has loan features in their app.

In my opinion, the only line between the current strong position and the fall of multifinance companies, is regulation. Those regulations and their bueraucracies are so thick that establishing a multifinance companies can be a difficult thing. Some strong-non-financial companies might not be very soon entering multifinance market (although I’m sure they will, or even already on progress). Still, rather than built, a collaboration with multifinance companies which already has legal standing & operational expertise, should be a better choice : faster to start, cheaper than built, less time to learn the business.

In every threat, there’s opportunity. The collaboration with non-financial institutions is an opportunity. Now somebody must take that opportunity, and beat those multifinance companies on their own business. Who is that somebody? Not sure about that, maybe some crazy-rich Indonesians who wants to earn more money, maybe somebody from US, Singapore, China who sees the opportunities? The point is, there’s a cake : it’s called as collaborative financing, so who will eat that?

Well, why don’t the multifinance itself eat the cake? Instead of doing the business to their existing consumer segment, why don’t they collaborate with other non-financial institutions? Let the multifinance provides loan experties, and let the other tech companies leverage their own customer base. In other words, use X app, but for loan, use loan feature from X app (which is backed by multifinance).

What about more concrete example? Company A business is selling farmers crop. They are tech-based companies which has app for crop marketplace. They naturally have access to farmers. Some farmers needs money to produce crops, so the farmers come to company A and says “Can you lend me some money? I’ll give it back to you with interest.”. Unfortunately, company A does not have money, nor legal license to do this loan. So they miss an opportunity window. Now imagine if company A works with multifinance M. This multifinance M does not have access to farmer who needs loan, but has money and legal license. Working in silos, company A and company M will not gain benefit, and farmer get no money to plant. Everybody loses. But what if company A + company M join capabilities? A got farmer data (who need loan). M got money & legality. So, A + M can gives loan to farmer that needs it, everybody wins.

Back to original question : Well, why don’t the multifinance itself eat the cake? I think the answer of that is several things :

  1. It’s not on the multifinance policy to do digital collaboration. They’re rich anyway, without even having to do digital collaboration.
  2. multifinance companies, even the large ones, is not too familiar technically with “digital collaboration”. Having said, it’s basically Open API. Most times, multifinance works thorugh old-school way for digital collaboration : csv files, FTP data sharing. Which is possible, but more annoying to be implemented by tech-based companies

To overcome point 1, the policy, is likely, is the C level decision to do this. Need a big gut to break a-decade-or-more business habit. And a large canine-teeth to enforce this policy-change to their internal teams. Basically, all hard things about “digital transformation”. This is the hardest part.

To overcome point 2, is somewhat “easier”. Technology for open API is not an alien things these days. Unfortunately, for a-decade-or-more tech team, open API is a freak’s item. After all, they’re doing fine for these long. This is not easy too. Even if the business and tech team agrees with Open API, most multifinance (at least big players that I know) is not familiar with this concept, moreover the implementation.

But then, the threat from digital ecosystem is real and happening, even if some multifinance still -somewhat- feel safe in their shell. Sooner or later, the outer environment (digital transformation) will break the secure shell (multifinance status quo). When that happened, it’s a matter of “asap dapur” (income security, thus family well-being also). So -in my opinion-, there’s only two choices :

a. live with the shell, and hope it’s not break too soon

b. leave the shell, and adapt for digital ecosystem. This is hard, insecure, and will need cost & effort. But at certain point, a new, bigger, stronger shell will be built.

Point b is what I called as open financing: a digital-powered business by multifinance, to expose their business capabilities and build easy and limitless collaboration on digital ecosystem. Financing (lending) for everyone!

Currently, there’s only one multifinance that brave enough to leave the shell and start open financing. Honestly speaking, if multifinance has 8 legs, maybe that multifinance currently only spread one or two legs out of their shell (disclaimer : this is my personal opinion). But I think this is a dawn of open financing. Well, if you wonder what is that multifinance, and whether you can collaborate (and make some money) with them, just go to bficonnect and start do some open financing!




Timotius Pamungkas

A father, a husband, a tech enthusiast. In that particular order.