Indonesian Digital Wallet Provider OVO Introduces Shariah Compliant Mutual Fund Product

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Indonesia’s digital wallet provider OVO has introduced a Shariah-compliant mutual fund product, which reportedly offers a fairly low buy-in for a product of its kind (less than $1). It lets investors instantly cash out their funds in real-time.

The Syariah Syailendra OVO Bareksa Tunai Likuid mutual fund product is being offered via the OVO app with assistance from Indonesia’s fund manager Syailendra Capital and its business partner Bareksa.

The company’s management noted that by setting the minimum investment threshold to a highly competitive IDR 10,000 (equivalent to SGD 1 or $ 0.70) and enabling investors to easily access their money at any time to conveniently pay for items, OVO has removed major barriers to investing.

In January 2021, OVO introduced a digital mutual fund product which received a fairly good response, attracting approximately 450,000 investors during the first 3 months.

Recently, OVO introduced its Shariah-compliant financial product in the form of a digital life insurance service known as PRUTect Care – Hospital Cash with assistance from Prudential.

Rajiv Chandna, OVO Chief Commercial Officer for Financial Services, stated:

“Approximately 40% of Indonesians that we surveyed have expressed interest in investing in shariah investments through the OVO application. We believe that there is enormous untapped potential for shariah products and services. With this instant cash-out feature and shariah-compliant product, OVO is continuing to drive innovation in the micro-investment landscape in Indonesia, towards enabling more Indonesians to participate in their country’s growth story.”

As covered earlier this year, OVO teamed up with Manulife Aset Manajemen Indonesia (MAMI) and its partner Bareksa in order to introduce an instant redemption mutual fund. OVO stated that the new offering is the first of its kind in the Southeast Asian country.

The money market mutual fund product is being offered via the OVO mobile app as part of its OVO Invest feature from IDR 10,000 (appr. $0.71) onwards. OVO confirmed that the product also offers instant redemption.

With this new product launch, OVO plans to improve the micro-investment space in Indonesia and make investing more accessible and lucrative to new or first-time investors.

In 2019, there were just 1.7% of Indonesians that took part in the financial market according to data provided by the Financial Services Authority (Otoritas Jasa Keuangan). Entry barriers to investing might include lack of access to good investment opportunities, high capital entry requirements, payment issues and the relative illiquidity of the invested capital.

This partnership with MAMI is the latest in several other major partnerships for OVO, including its collaboration with Prudential Indonesia in the insurance services business and a joint initiative between OVO’s parent firm BCP and local Insurtech company ZA Tech.

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