Indonesia's Open Finance Market Potential Reaches Almost Rp 30 Trillion
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Indonesia has significant potential in the open finance market. This is noted in the *Open Finance Deep Dive Report*, a research report resulting from a collaboration between Katadata Insight Center (KIC) and Finantier, a leading open finance platform in Southeast Asia.
Open finance is an advanced stage of open banking, where all financial institutions involved in the ecosystem can share data through open application programming interfaces (APIs).
This system can be used to improve financial inclusion among the public by using alternative data sources for creditworthiness assessments.
In its application, open finance has four types of product innovations or use cases. First, account aggregation. This innovation can provide a customer's financial profile by collecting and integrating the customer's financial and alternative data.
Second, verification/electronic know your customer (e-KYC) to identify and verify customer identities. Third, credit scoring to facilitate financial institutions in digitally assessing the creditworthiness of prospective borrowers.
Fourth, payment automation. This facilitates customers to make automatic payments through deductions from connected financial accounts, such as debit/credit cards, e-wallets, and even telecommunication credit.
"The broad scope of its application makes the open finance market potentially viable for development," said KIC in its report.
According to KIC's research, the application of open finance for account aggregation is estimated to have a market potential of Rp2.9 trillion. Then, the market potential for verification (e-KYC) is valued at Rp111.5 billion, credit scoring at Rp856.5 billion, and payment automation at Rp26 trillion.
"Through the various use cases offered, if implemented now, we estimate the potential market size of open finance in Indonesia to be around US$2 billion (Rp29.9 trillion). This figure certainly has the potential to increase if the application of open finance is adopted comprehensively in this industry," said KIC in its report.
This open finance research was conducted by KIC during the period of July-October 2022 through desk research and in-depth interviews with 23 stakeholders from industry players, including open finance platforms, banks, fintech companies, e-commerce companies, credit bureaus, telecommunication providers, regulators, and other related parties.
The findings from the desk research and interviews were then presented and discussed in focus group discussions (FGDs) involving several financial industry associations. The complete report can be downloaded at [this link](https://kic.katadata.co.id/insights/45/open-finance-deep-dive-report-unlocking-the-potential-of-open-finance-in-indonesia).
"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."
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