The rapid change in the fintech space, particularly in a country like Indonesia, is a good example of how a western business mindset will need to adapt if it wants to be a part of the action. The question is where Australia’s know-how and expertise might work in Asian markets and cultures, and vice-versa. Some Australian companies are making inroads, while government bodies and universities are developing strong links between people and institutions. However it develops, working with or in Asia means changing a mindset about creating a business relationship.
I was speaking with Niki Luhur, Chairman of the Indonesian Fintech Association (Asosiasi Fintech Indonesia) about his, and he said that the sector is moving fast. “It’s looking very promising. It’s also going to get very competitive.”
A 2016 report found there were 140 fintech start-ups in Indonesia, compared to just a handful a few years before. However according to Niki Luhur it is a space that requires intensive management and executing a plan takes “more work than it should” due to the nature of bureaucracies and the way business is done.
One theme that comes up regularly, and not just in fintech, is the very strong push by Chinese investors, who are assertively stepping in to get an early slice of the potential market.
Niki Luhur says they have technological capabilities which are world standard, and are not afraid to move into an unknown space, and spend money.
“They’re running, off the blocks. It will be hard (for others) to catch up.”
This is a theme that I have heard before, across different sectors – Asian investors are not afraid of a space that is uncertain, they are used to being uncomfortable and to expect some bumps. Whereas western style businesses, which have grown under a different set of rules, want everything to be watertight before they make a move, and are shaken by short-term situations.
It is different risk calculation, and not an easy one. Some Australian businesses how to ride the waves and rely on the trusted relationships they have built. I think back to a seminar where a major communications company talked about accepting a supply agreement that did not have the paperwork that would be expected in an Australian environment. It was a bit nerve-wracking, however it all worked out, because they had spent considerable time in developing their relationships and decided it was a moment to show trust.
Being in a different space and knowing how to navigate it is part of doing business in a developing economy. Indonesian businesses have the edge because they know how to navigate an unwieldy system ..others are stepping in to see how to work with them. The government of Indonesia wants these native systems and entrepreneurs to flourish, with the input of foreign investment, to an extent. Finding that space is the trick.