Pioneering “Neo Rural Bank” in Indonesia
Indonesia has 1,500 rural banks across the archipelago. Having their foot on the ground, collectively they have big potential to boost Indonesia’s financial inclusion since only less than 40% of Indonesia population have credit data. Unfortunately, lack of digitalization and innovation have rendered them less effective. They often have difficulty attracting deposits as more than 95% of the country’s depositors reside in urban areas, despite the fact that the government guarantees the ceiling rates of 2.5% higher than commercial banks.
As the digital economy continues to thrive, the rural banks community began to feel left behind and ponder whether this business is becoming a sunset industry. While some of these rural bank owners are well aware of the need to change and adapt to this digitalization, most of them are not. Thus, Komunal is committed to involve rural banks into their ecosystem with their latest innovation: Deposito BPR, a platform where deposit transactions can easily be made online.
Deposito BPR was officially launched on October 13, 2021. Through Deposito BPR, Komunal introduced the new concept of “neo rural bank” to upgrade and equip smaller banks with advanced capabilities. The company digitalizes rural bank’s fragmented processes: replacing handwritten signatures with digital signatures, enabling eKYC (Know Your Customer), and launching e-bilyet. All of these have never been done before in rural bank history. The platform lowers the cost of acquisition for rural banks which in turn might lower the cost of credit for borrowers in suburban areas.
OJK has been a huge devotee in strengthening the fintech lending sector. Apart from collaborations, OJK has vigorously done open dialogues between the authorities and fintech lending firms. As a form of support, OJK has also recently released an official license for Deposito BPR [License No.: S-178/MS.72/2021], making Komunal Indonesia’s first authorized funding agent. The license grant marks another significant step of Indonesia’s financial institutions to boost the country’s financial inclusion tremendously. It also means that Deposito BPR becomes the “first of its kind” product that includes rural banks in its ecosystem.
Since Deposito BPR first launched its beta version, some rural banks have sailed on-board and felt the overwhelming impact. Collectively, they have received 10 billion rupiah of deposit, all without face-to-face meeting. The platform has since received numerous positive testimonies.
“Supported by cutting-edge technology, this collaboration benefits rural banks greatly as it promotes rural banks to an even wider range of audiences. Not only that, Komunal is very helpful for both lenders and borrowers. Overall, I’m very satisfied with the services offered by Komunal,” said Renny Wulandari, Director of BPR Surya Artha Utama. Meanwhile, Lilis Warsiyah, Director of BPR Kawan reviewed, “The whole process of loan request until loan disbursement is very fast. This is absolutely helpful for business owners when they need emergency funds. It is also guaranteed by LPS (Deposit Insurance Agency) and safe for the rural banks.”
Komunal’s mission doesn’t end here. Looking forward, Hendry and his peers still have a lot of homework to complete. Komunal aims to keep collaborating with OJK and BPR Association in each region, leveraging innovation and technology in the process while also spreading more awareness towards a bigger market, such as providing educational content through social media and empowering macro and micro influencers, while making further improvements to Deposito BPR. That way, Komunal will be able to partner with more rural banks outside East Java.
“Every day, we always look for new ways to positively impact and contribute to Indonesia’s economic growth. Financial services are the lubricant and lifeline of the economy, as fintech strives to democratize and enhance the efficiency of these processes. Essentially, it improves financial inclusion and the economic well-being of all Indonesians,” concludes Hendry.