"Tech winter" is a popular term describing a condition where technology-based start-ups begin to collapse one by one.
"Despite the tech winter phenomenon, investment in the fintech sector in Indonesia is still performing quite well, supported by the positive outlook of fintech players," said Adek Media Roza, Director of Katadata Insight Center (KIC), in a statement received in Jakarta on Thursday.
The AFTECH Annual Member Survey 2022–2023, conducted by Katadata Insight Center in collaboration with the Indonesian Fintech Association (AFTECH), revealed that 84 percent of fintech companies have laid off workers, and 76 percent are not planning to add or recruit new workers in the near future.
Roza said that some fintech players view tech winter as a momentum to continue innovating.
The passing of Law No. 27 of 2022 on Personal Data Protection and Law No. 4 of 2023 on Financial Sector Development and Strengthening are also seen as reflecting the support of the government and regulators for the fintech industry.
"As many as 76 percent of fintech players agree that current government regulations are conducive to supporting innovation, although relaxation or leniency in regulations and the provision of certain incentives are still expected," he informed.
The AFTECH survey used several methodologies, namely quantitative, qualitative, and literature studies, to complete the analysis.
The AMS 2022–2023 questionnaire was circulated online among all AFTECH members from May 15 to June 15, 2023. Seventy-five respondents participated in the survey.
In addition, in-depth interviews were also conducted with 3 AFTECH members, namely Ayoconnect, Trusting Social, and Amartha. Several secondary data sources were used to complete the analysis, including regulations, journals, the Financial Services Authority (OJK), and Bank Indonesia, among others.
Regarding tech winter, AFTECH chairperson Pandu Sjahrir emphasized that fintech companies in Indonesia see this phenomenon as a momentum for innovation.
Several AFTECH members interviewed for the survey said that they had launched various product and service innovations to maintain their company's performance, he disclosed.
This shows that the fintech industry is developing positively to encourage financial inclusion to reach the 90 percent target by 2024 and strengthen the national digital ecosystem.
"We believe that Indonesia's fintech industry is steadily moving towards sustainable inclusion," Sjahrir said.
Meanwhile, chairperson of the OJK's board of commissioners, Mahendra Siregar, revealed that the global tech winter has had little impact on the domestic fintech industry. This has been due to Indonesia's high and sustainable economic growth.
"Indonesia's success story in economic growth must be the most important part of the fintech success story. Therefore, OJK hopes that Indonesia's fintech growth trend will remain positive in the long run. What is known as tech winter internationally does not and should not happen in Indonesia," he said.
For fintech growth to run well, good governance, risk and compliance, transparency, credible audit mechanisms, and accountability must become key behaviors of fintech businesses, he added.
"We believe fintech in Indonesia can be an integral part of Indonesia's economic development. The innovations and solutions offered by fintech are needed by Indonesia, which has high and sustainable economic growth, large demographics, good political stability, and rapid social development and welfare. AFTECH must play a major role in strengthening the fintech industry in Indonesia," Mahendra said.
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Reporter: Azis Kurmala
Editor: Anton Santoso
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