Excerpt: not yet too late, but be careful of the rumours

End of last year we wrote about Chinese payday loan companies entering Indonesia market.

You probably know the style of many Chinese companies – they prize speed and aggressiveness, and the prevailing assumption was: the time window was limited, very soon leading companies will emerge, leaving no room for late comers.

Good growth indeed

Top Chinese payday loan apps now deliver more than 10,000 loans per day, mostly from repeat customers. The stickiness of customers is obviously a good sign for the companies. It is also worth noting that many of the top loan companies in China are not doing much more than this number.

UangTeman, on of their top competitors, is also rumoured to be in the process of raising a big round. Another rumour that is in the market is Ant Financial’s potential acquisition of Cermati – a financial product comparison service (and more).

So how has the landscape changed since our last article, and crucially for potential investors, is it too late to join the race?

Still room in the market

 Are all these reasons pointing towards a market saturation in near future? We think the answer is NO.

Recently, a VC friend called us, saying he was perplexed by the market. “We thought the way to go was to acquire customers as aggressively as possible,” he said. “However, it has been more than half a year and the customer acquisition cost (CAC) is still very low”.

This is a telling sign that the market is not yet a red ocean or an oligarchy. In China, the CAC rose from 5 RMB (US$0.75) to almost 200 RMB (US$30) – an increase of 40X – within a year! More than 12,000 companies joined that rush in China – and in Indonesia now we believe it will still take some time for the CAC to rise significantly.

Also, the infrastructure in Indonesia is different from that of China. Most people still do not have bank accounts or third-party wallets (to disburse cash into and repay from); KYC cannot be done reliably and at scale yet; credit scoring is still in its infancy and many top loan providers identify specific customers rather than build generic rules.

Another key factor is that for payday loan services, customer stickiness is there but loyalty is not. Experience in China shows that most loyal customers will borrow from multiple parties to manage their cash flow (or cash flow for their small businesses). Good customers are not retained by offering them more loans – more services are needed; however, for companies to make quick money, they probably focus attention on more customers rather than horizontal expansion.


With all these factors above, we believe that the growth will come from tapping into the (good) customers who have not yet been tapped into – and there are a lot of them. Even the most aggressive players will only target a few cities as of now.

Hence it is not yet too late to join in the gold rush. But if you choose to wait out further, we can’t guarantee whether the opportunity is still there.

Also, be careful of the rumours – there are many of them and often times they tell totally opposite things. Many are accurate; many others are not. This can impede your decision making, causing either missed opportunity or missteps.

Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at [email protected] and let us know how we can help.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].


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Amresh used to cook and run food stalls. Stumbling into the tech industry by accident, he decided to stay for the long run. He joined Momentum Works in 2016 as a Project Manager. He is intrigued by ever changing internet businesses and its impact on day to day life. His interest lies in football, food and cryptocurrencies.