Investors are Interested in Fintech despite the Sluggish Economy
Research from MicroSave Consulting (MSC) shows that financial technology (fintech) startups are in demand by investors, even though the economy is sluggish due to the corona pandemic. However, investors remain selective in providing funding to startup companies in this sector.
In the second quarter, at least five Indonesian fintech startups received fresh funds totaling US$ 52 million. This is in line with data from the Indonesian Venture Capital Association (Amvesindo), 25% of the 32 start-up companies that received funding per second quarter were fintech.
Some of them are Modalku, which received a series C funding commitment of US$ 40 million (IDR 625 billion), KoinWorks US$ 20 million (IDR 316 billion), and Investree US$ 23.5 million (IDR 379.3 billion). “Indonesian fintech remains attractive to investors,” said Country Director MSC Indonesia Grace Retnowati in the 2020 National Fintech Week webinar, Tuesday (24/11).
MSC noted that the number of application downloads and fintech payment transactions has increased. Based on Bank Indonesia (BI) records, the value of electronic money transactions was IDR 16.7 trillion per month during January-July, an increase of 59% compared to the same period last year (year on year / yoy).
Loans in the Insurtech Category have also Increased
The insurtech category of fintech transactions also increased, although the insurance industry premium fell 6.45% yoy as of August. This is because startups such as Qoala and PasarPolis adapt products to consumer needs during the Covid-19 pandemic. Qoala, for example, processes more than two million policies per month in October. The number jumped compared to last year’s 7,000.
Likewise with PasarPolis. The demand for shipping service insurance such as GoSend and GoBox increased 12 times during the coronavirus pandemic. In addition, insurance for Gojek driver-partners was purchased by more than 200 thousand.
However, even though it received a positive response, investors were quite careful in giving their funds to fintech. “They (investors) ask fintech to carry out scenario analysis in times of a pandemic for a more rational growth,” he said.
Lending by fintech financing (lending) to the health and agricultural sectors increased. On the one hand, the ratio of bad loans or non-performing loans (NPL) has increased. This is reflected in the decreasing success rate of loan repayments under 90 days (TKB90).
Grace said that investors are selective in providing funds. They will examine startups that are able to adapt during a pandemic and have a sustainable business. The Advisor for the Digital Financial Innovation Group of OJK, Maskum, added that the increased use (use-case) of fintech services was due to changing people’s behavior.
Modalku Distributes KTA Up to 2 Billion to MSMEs
Modalku, as a digital peer-to-peer (P2P) lending platform, offers unsecured loan facilities of up to IDR 2 billion to business actors who market their products through various platforms or online or MSMEs.
Modalku Co-Founder & COO Iwan Kurniawan said that online business actors who apply for loan funds will immediately speed up the process for a maximum of three days of completion. Provided that the requested documents have been completed.
“The increase in the use of digital services in the community during this pandemic has also influenced the development of online entrepreneurs’ businesses. This potential is a motivation for Modalku to reach more online entrepreneurs in Indonesia,” said Iwan in a written statement, Thursday (19/11/2020).
Iwan explained that the loan interest charged is also low, starting from 2 percent per month which will be determined based on the risk profile of each entrepreneur. According to him, until now, the nominal loan proposed by business actors varies, with an average of around IDR 25 million.
Iwan added, until now, Modalku has provided access to funding of more than IDR 760 billion to more than 26,000 digital business actors in Indonesia. However, as a group of companies in several countries, the distribution of business loans has reached IDR 18.8 trillion.