Digital payments unicorn Ovo has given a boost to the Islamic micro-investment market in Indonesia with its first Islamic mutual fund product whose buy-in starts at 10,000 rupiah ($0.70).
Head of Ovo Invest, Hadibrata Mantik, said in a statement that the Islamic mutual fund will give users more investment options and contribute to national efforts to speed up financial penetration and literacy.
The percentage of Indonesian adults with a bank account rose from 35% in 2016 to 56% in 2018, according to the Financial Inclusion Insights Survey by the Indonesian National Council for Financial Inclusion. Despite the growth, Indonesia still lags behind neighbours such as Malaysia and Thailand.
Ovo has also found a market for Islamic investments on its app. 40% of respondents to a survey that the company conducted expressed interest in Shariah-compliant investments through the app, said Ovo.
The platform is no stranger to Islamic products. In April, it introduced a Shariah-compliant insurance product with Prudential that offers monthly or annual contribution payments starting from 5,000 rupiah per month.
Ovo’s Islamic mutual fund follows a conventional mutual fund the company launched in January that also has a 10,000 rupiah buy-in.
Similar to the conventional product, investors in the Islamic mutual fund can get instant cash-outs.
Ovo is working with investment platform Bareksa, that it reportedly acquired in 2019, and fund manager Syailendra Capital on the Shariah-compliant mutual fund.
The platform is used by more than 1.2 million merchants in 426 cities and regencies across Indonesia.
The mobile app micro-investments market is growing in Indonesia. Other apps that already offer micro-investments in funds include LinkAja that partnered with robo-advisor Bibit, including Islamic products through LinkAja Syariah.
Across Southeast Asia, micro-investments have taken off by leveraging on digital payment platforms and e-wallets. In Singapore, Grab introduced a micro-investment product in August last year. The company that operates in seven countries in Southeast Asia, including in Indonesia, also sells insurance policies and SME loans in selected markets.
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