OUTLOOK FOR THE E-CONOMY 2017
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INDONESIAN financial technology company PT Digital Alpha Indonesia (UangTeman), which provides a direct online lending platform recently expanded its services to Bali and Makassar, aiming to serve more people in the eastern part of the country.
“By having a presence in both Bali and Makassar, we are hoping to enable most people as well as small and medium enterprise players to have access to loans, so they do not need to borrow money from loan sharks,” its chief executive officer Aidil Zulkifli explained.
With the expansion to Bali and Makassar, in early February and end of February respectively, UangTeman is eyeing to increase its loan disbursement target to Rp100 billion (US$7.5 million) by the end of this year.
As Makassar is the company’s first gateway to more people in Eastern Indonesia, UangTeman aims for the South Sulawesi capital city to contribute around 5% to 10% of its total target in 2017.
“Makassar is the megapolitan city in Eastern Indonesia and we have seen a lot of loan applications coming from here. This is why we believe that with the launch of our service in the city, we can optimise our reach,” its deputy CEO Rio Quiserto added.
UangTeman provides small, short-term loans ranging from Rp1 million to Rp4 million (US$74.7-224.299). Customers are charged 0.75% to 1% in interest per day for the next 10 to 30 days.
Customers who want to apply for loan, need to fill an online form, providing information to help with risk measurement. UangTeman developed its own system utilising big data and social data in credit scoring analysis. The approval or rejection process will take between three to 24 hours.
Quoting data from Indonesia’s Financial Services Authority (OJK) Aidil said that the country needs Rp1649 trillion (US$123.4 billion) in loans but the banks are only capable of fulfilling 40% of this demand.
“There are still many people out there in rural areas who find it very hard to get loans from formal financial institutions. We want to be able to at least provide small loans to people in need in an easy and transparent way,” he continued.
By the end of last year, Uang Teman had disbursed more than Rp32 billion (US$2.4 million) in loans to 16,000 customers. Thirty percent of the loans went to SME players as business capital. Uang Teman also maintained a non-performing loan (NPL) ratio of under 3%.
Mobile app for wider reach
The fintech company is planning to expand its service to 15 more cities across the country by the end of the year. To help the company do this, UangTeman has launched its own mobile app available on both AppStore and PlayStore.
“One of the demands and suggestions we hear from our customers is that they want us to provide easier access to UangTeman by having a mobile application. Given the increasing smartphone penetration, this is the right thing to do,” Rio explained.
Usually the disbursement of a loan from UangTeman will take up to three hours to reach a customer’s bank account. With the mobile application, Rio said that the company is targeting to improve the process to 15 minutes.
Since the launch of its Android mobile app in March last year, UangTeman’s mobile app users have hit 64,000. The company is seeing a constant increase in the number and predicts that the mobile user contribution will reach 60% this year compared to web app users.
Startup to help push financial inclusion
With almost 80% of the total population of Indonesia’s 250 million people in Java and Sumatra or the Western part of Indonesia, a majority of the development and infrastructure projects also prioritise this area.
The latest survey of financial literacy and inclusion conducted by the OJK shows that Jakarta has the highest percentage in both financial literacy and inclusion. Around 40% of people surveyed in Jakarta are financially literate, and 78.18% are financially included.
In Makassar, the biggest state in Eastern Indonesia, only 28.36% are financially literate rate and 68% are financially included. The numbers are even lower when it comes to Papua, with only 22.18% being financially literate and 61.45% financially included.
“There is quite a gap in terms of financial inclusion between the Western and Eastern parts of Indonesia, especially when we talk about lending inclusion. All the money spent will go to bigger cities in West Indonesia.
“We need more efforts and initiatives to push financial inclusion in Eastern Indonesia, so that the people there can build a better life. Banks cannot do it alone. We need startup players to come and help us with this,” senior research executive of OJK’s strategic policy development department, Hendrikus Passagi told Digital News Asia (DNA) in an interview last year.
Since then, OJK has shown support to fintech players especially to those who want to build the Eastern part of the country. The regulatory body also issued a regulation earlier this year for fintech players that run peer-to-peer (P2P) lending businesses, such as UangTeman.
“We want to provide guidelines first, so that players can continue their operations but have a legal umbrella. It is still in a very initial phase, but at least now we have some clarity,” said OJK chair Muliaman Hadad in January this year.