The global impact of the Covid-19 pandemic had been massive, especially in impacting the health and socioeconomic sector, claiming millions of lives while worsening poverty and inequality. However, one positive impact of Covid-19 is towards the digital sector, accelerating the adoption of digital technology by several years. Indonesia, as a large digital market with a growing digital economy, is a particular highlight as the world’s most likely internet users to make online purchases. Fintechs, as a part of digital economy faces difficulties due to the pandemic, but it also opens new opportunities.

This article highlights how the covid-19 Pandemic impacts Indonesia’s digital sector, with focus on its fintech landscape. Lending and Payment system are the 2 most highlighted fintech sectors as they are among the most influential in Indonesia.

1. Digital Impact Of Covid-19


The pandemic has accelerated the growth of the global digital economy as people shifts many activities online. According to Hootsuite dan We Are Social, both the number of internet users and active social media users in 2020 had increased by 7,3% and 13,2%, respectively1. Growth of social media had accelerated significantly since the beginning of the pandemic, with the current total global user rising to 4,2 billion in January 2021, a 13,5% increase from the previous year1. The average time used for social media had increased by more than 30 minutes daily over the last 5 years, with the average user using social media for almost 2,5 hours per day1. The pandemic has significantly increased the use of global teleworking and videoconferencing applications, as well as digital educational and entertainment services, while digital transportation and accommodation services sector received significant setbacks2.

While overall retail had been adversely affected by the pandemic, one aspect of retail that grew is e-commerce. In January 2021, all categories of global e-commerce recorded double digit YoY growth except travel, while food and personal care category have the fastest growth (41%)1. Online sales across the world and market share of online retail to overall retail has risen during the pandemic2. On the customer’s perspective, the same shift is observed as GWI data shows that 77% of internet users aged 16-64 had purchased something online in the previous month1. Facing this, many business have added online offerings or shift product offers in order to meet the new customer demands2. According to McKinsey in July 2020, more than half of both global customer interactions and offerings of products or service are already digital3.

A particularly large potential digital market is Indonesia, with over 200 million internet users in 2021 and a rapidly growing digital economy sector. The digital economy of Indonesia is also boosted by the pandemic, as in 2020, Indonesian internet users had increased by 15,5%, while active social media users had risen by 6,3%4. According to Google, TEMASEK and Bain, the overall internet economy is expected to reach US$70 billion GMV (gross merchandise value) in 2021, a 49% increase from 2020, and remains the largest digital economy in Southeast Asia5.

Since the start of the pandemic until 1H 2021, Indonesia has 21 million new digital consumers, with almost threequarters coming from non-metro areas, which shows positive technological penetration5. This behavioral change seems to be permanent as 96% of these new consumers are still using these services, and 99% of them would like to continue using them. Meanwhile, pre-pandemic consumers have increased their digital consumption, as they used 3,6 more services on average during the same time frame. These facts shows a growing and active digital consumer market.

According to a survey from GWI, Indonesians are the most likely internet users to make online purchases, with 87% respondent having bought something online in the last month1. The fashion sector (US$9.81 billion) had the largest consumer spending in January 2021, followed by electronics and physical media (US$6,91 billion)4. Food and personal care sector has the largest YoY growth (61,3%) while travel contracts by almost half (45,8%), which mirrors the global trend.

In 2020, the GMV of Indonesian internet economy had only recorded a growth of 17,5%, mainly caused by the travel sector’s significant (75%) drop due to the pandemic, while the transport and food sector had also contracted, though to a much lesser extent (10%)5. However, the significant (67%) growth of e-commerce during the same year is enough of a boost to make up for the drop in other sectors.

The increase of Indonesian internet economy GMV in 2021 is also boosted by e-commerce, which grows by 52% and contributes more than 75% of the overall GMV, which shows its substantial influence5. The Indonesian GMV is projected to reach 146 billion in 2025, with online travel expected have the fastest growth (30%), bouncing back from its pandemic drop, while e-commerce expected to grow the slowest (18%), but maintaining its most of its contribution (71%). The other sectors, which are transport and food, and online media are expected to grow 25 and 26% respectively.

2. Impact Of Covid-19 Towards Indonesian Fintechs

There is a sense that pandemic has accelerated the growth of fintech in Indonesia as people switches to online financial activities6. Several fintech sectors had been growing rapidly, such as investment, remittance, and insurance, which had grown above 30% in 20206. This growth is shown in data from OJK that monthly fintech lending had recovered to an all-time high in October 2020, after several months of lows during the pandemic. Meanwhile, Research from ADBI suggests that the Indonesian fintech market had been resilient to the pandemic, but the pandemic had not been proven to accelerate the development of payment and lending fintechs7.

According to the survey of Indonesian Fintech Association, 69% of its members had experienced decrease in revenue and users, difficulty in funding, operational difficulties, and/or delays in business expansion8. This forces many fintechs to strenghten their cash management and delay business expansion. However, it must be stated that this survey was done in March and June 2020, during the market drop and before the bounceback. The post-pandemic recovery had been rapid, as fintechs had lent more in the first 7 months of 2021 than in the whole of 2020.

According to Fintech SG report, the pandemic has a mixed impact on lending fintechs in Indonesia9. On one hand, online loan demand increases as smaller business needs quicker microloans to face the pandemic and governmental restrictions pushes people to use online services. However, funding decreases as investors became more risk averse, and NPL risk increases as requests for restructures increase and the economy slows. This is shown in the data from OJK as the level of NPL above 90 days rises during the pandemic, peaking in August 2021 (8,8%). Furthermore, collaboration with government and other business are delayed, but digital tech adoption such as e-KYC improves.

As a whole, the Indonesian p2p lending fintech landscape had been consolidated during the pandemic. The authority has enacted a moratorium on the registration on lending fintech while many registered ones are having business difficulties, reducing the number of registered lending fintech. It reached its high point of 162 in December 2019, and had been reduced to 104 in October 2021, with 5 Islamic Fintech losing their registration status during this time. However, many fintech had upgraded their status from registered to licensed during this time frame, with fully lisenced fintechs increasing from 34 to 93, with 7 Islamic Fintechs included among them.

Covid has also accelerated the digitization of payments. Indonesia is one of the fastest growing market of mobile payment, with users projected to triple by 202510. In Indonesia, people uses an average of 3 mobile wallets per customer, maximizing the benefits of each. The use of mobile wallets also pushes e-commerce, as 81% of mobile wallet transaction is used to pay for online shopping11.

During the pandemic, total volume of digital transaction had increased by 37,8% YoY10. Moreover, almost every (98%) digital merchant in Indonesia now accepts digital payment, with more than three-quarters feeling that they likely would increase usage going forward5. Other than the pandemic, the introduction of a comprehensive digital payment system, called QRIS by BI has also boosted this sector10. QRIS allows interoperability between different digital payment system providers, and also making digital payments more accessible to MSMEs.


We can see that the covid-19 pandemic had accelerated the growth of the global digital economy. Indonesia has also grown as a digital economy, with e-commerce sector being particularly boosted by Indonesia’s large, growing, and active consumer sector. The fintech landscape in Indonesia has faced mixed impact during the pandemic. Lending fintechs as a whole are more consolidated due to the pandemic, and while online loan demand increases, funding decreases and risk increases. On the other hand, payment system fintech experiences more universal growth, with increasing digital transaction and a more comprehensive digital payment system boosting the overall sector.