Can value chain innovation improve Indonesia’s digital financial landscape?
Indonesia’s financial services (FSI) industry is set for significant growth and innovation as it adapts to the rapidly evolving global business environment.
The robust growth of Indonesia’s financial sector is exemplified by the 27.96 percent year-on-year increase in the country’s digital banking transaction value, which reached Rp4,900.6 trillion as of January 2023.
The rapid growth is driven by the convenience of digital payment systems, the ever-growing digital economy and the rapid rise of digital banking.
To fully realize the potential of Indonesia’s financial services industry, it is critical to embrace value chain innovation throughout the sector.
Innovation in the value chain, involving the optimization and redesign of processes across the entire value chain, can transform Indonesia’s digital financial landscape. Financial institutions can improve their offerings, streamline operations and facilitate more efficient, transparent and secure transactions by leveraging cutting-edge technologies such as artificial intelligence, blockchain and big data analytics.
Embracing this transformation has the potential to attract foreign investment, promote collaboration with global financial service providers and ultimately stimulate Indonesia’s economic growth.
Digital Finance in Indonesia: A Platform for Value Chain Innovation
The digital financial sector in Indonesia has emerged as a platform for value chain innovation, with the country’s burgeoning digital economy expected to obtain a valuation of 146 billion dollars by 2025.
Many Indonesian businesses are investing in digital technologies to improve their value chains and increase efficiency, with 87 percent of companies having initiated digital transformation journeys.
The widespread use of smartphones and internet connectivity among 212.9 million users has created a huge opportunity for digital finance solutions, making it a crucial aspect for companies in FSI.
Southeast Asia largest economy has embraced digital finance, with various services and platforms emerging to serve the diverse population. The rise of digital payment platforms, such as GoPay, and peer-to-peer lending services exemplify how digital finance is fostering value chain innovation and transforming traditional financial ecosystems.
By focusing on innovation throughout the value chain, Indonesian FSI companies can create a competitive advantage and prepare for long-term success, adapting to changing market dynamics and consumer preferences.
Furthermore, implementation of value chain innovation enables FSI companies to offer tailored products and services that promote financial inclusion. This strategic approach positions Indonesia to become a leading global provider of financial services.
NEC’s value chain innovation approach
A study from the Asian Development Bank (ADB) highlights several challenges facing Indonesia’s banking and finance industry, including the country’s archipelago geography, limited access to technology and the digital divide.
These factors contribute to low banking penetration and economic exclusion. In addition, skills gaps and insufficient cooperation between banks and fintech companies hinder innovation in the industry. These barriers often prevent financial institutions from implementing innovative solutions to improve services and reach underserved markets.
NEC Value Chain Innovation (VCI) is dedicated to promoting a collaborative approach to problem solving by creating innovative solutions together with its customers and partners. By leveraging its extensive expertise and resources, NEC ensures that all stakeholders contribute their unique capabilities to develop breakthrough solutions that address real-world challenges.
This approach promotes innovation and results in more efficient, robust and sustainable outcomes for all parties involved. By actively engaging with customers and partners, NEC VCI demonstrates its commitment to unlocking the full potential of value chain innovation and fostering lasting relationships that drive businesses forward.
Suresh Neelakantan
– Solving market challenges requires collaboration and innovation. NEC’s VCI approach enables Indonesian FSI to co-create and develop customized solutions with financial institutions and ecosystem players. This partnership-driven approach optimizes value chains, increases efficiency and facilitates the use of advanced financial services across the country, says Suresh Neelakantan, Senior Director, Value Chain Innovation Laboratory, NEC Asia Pacific.
This is particularly relevant as the industry adapts to the changing demands of the digital age while striving to provide accessible services to a diverse population.
“NEC’s strategic investments in global research and development, combined with partnerships with fintech companies, equip us with the expertise and resources needed to tackle Indonesia’s financial sector’s unique challenges. Through cross-industry collaboration, information sharing and breaking down barriers, NEC’s VCI is critical to driving innovation and optimizing value chains in Indonesia’s FSI, Suresh added.
This collaborative approach enables Indonesia’s FSI to embrace digital transformation and navigate the new normal, resulting in improved financial inclusion, improved customer experiences and a more robust financial ecosystem.
In a world characterized by VUCA (volatility, uncertainty, complexity and ambiguity), co-creation supported by digital technology represents the future. This is particularly relevant in Indonesia’s rapidly expanding the digital financial marketan ideal setting for the implementation of value chain innovations.
Interested in learning more about how NEC’s value chain innovation can revolutionize Indonesia’s digital financial landscape? Click here to discover the potential benefits of this innovative approach.
