Indonesia’s Lippo Group Banking on the Blockchain

Mochtar Riady, founder and chairman of Lippo Group, speaks during the Nikkei A300 forum in Tokyo on May 21, 2018.
Mochtar Riady, founder and chairman of Lippo Group, speaks during the Nikkei A300 forum in Tokyo on May 21, 2018.

Tokyo, JAPAN – Billionaire founder of the Lippo Group, Indonesian businessman Mochtar Riady is no stranger to tough times. During the Asian Financial Crisis in 1997, Riady astutely steered his billion dollar property and banking conglomerate to emerge from the crisis not only stronger, but more resilient to change. And now with fintech threatening to disrupt the banking industry, Riady is not taking the challenge sitting down, having decided to accelerate his conglomerate by embracing blockchain technology.

Speaking on the sidelines of a forum hosted by Nikkei Asian Review on May 21, Riady, who just turned 89 called the technology behind blockchain “simple,” but more importantly, “very useful” for improving the security elements of business. Riady added that the Lippo Group is also considering using blockchain technology in its e-commerce business, MatahariMall.com, a leading Indonesian e-commerce company run by grandson John. According to sources close to the group, Lippo is also looking to invest in blockchain startups.

John Riady, grandson of Mochtar Riady heads up the Lippo Group's digital operations and told Nikkei Asian Review earlier this month that the group will invest US$100 million annually to build its digital muscle.
John Riady, grandson of Mochtar Riady heads up the Lippo Group’s digital operations and told Nikkei Asian Review earlier this month that the group will invest US$100 million annually to build its digital muscle.

Riady’s remarks reflect an increasing discomfort among Asia’s legacy commercial institutions and a growing pressure to adopt transformative digital technologies in their businesses. With smartphone penetration far exceeding fixed line usage in Southeast Asia, many large Asian conglomerates did not anticipate the rise of ride-hailing apps and e-commerce. But Riady is not your typical Southeast Asian magnate. Having cut his teeth by turning around some of Indonesia’s most troubled banks before establishing Lippo Group, which has expanded to include malls, apartments, hospitals and generates over US$7 billion in annual revenue, Riady has also steered his group through the debilitating Asian Financial Crisis. With Forbes magazine estimating his net worth at US$2.9 billion, the octogenarian has been implementing digital makeovers as tech-savvy startups have become an increasingly malignant threat to Riady’s malls and supermarkets. With e-commerce and delivery services, becoming increasingly popular, foot traffic has been steadily dropping.

Which is where the blockchain comes in. Seen as a disruptive technology, the blockchain also has the power to synergize Lippo Group’s various business segments, including e-commerce, property and banking. Besides the online shopping platform MatahariMall.com, the group also runs a mobile payment service and a venture capital fund that invests in startups in Southeast Asia. Led by grandson John Riady, who oversees the group’s digital operations, Lippo will be investing US$100 million annually to build up its “digital muscle.”

But there is no sign that the patriarch intends to abandon his old business models and convert the Lippo Group into a digital play. While Riady concedes that the rapid growth of digital services will have “some influence” on physical retailers, “if we are able to match human needs, you will find a way to survive,” calling for an “offline and online” strategy that caters to the intrinsic human need for personal interaction.