Komunal's Co-Founders Rico Tedyono, Hendry Lieviant, Kendrick Winoto

Indonesia’s fintech company Komunal raises US$ 2.1 million of series A funding led by East Ventures, further promoting the country’s financial inclusion

September 22, 2021

Komunal, Indonesia’s first fintech company to offer Neo-rural bank services locally, announced earlier today that it has secured US$ 2.1 million (approximately IDR 30 billion) in the Series A funding round. The investment is led by East Ventures with participation from Skystar Capital. Both investors also backed Komunal in the seed funding round. The fresh capital will accelerate Komunal’s mission to boost financial inclusion in Indonesia by enhancing its latest product DepositoBPR.

Recently, DepositoBPR has been regulated under an official license from Financial Services Authority (OJK) [License No.: S-178/MS.72/2021], making Komunal the first authorized funding agent in Indonesia. Funding Agent cluster under OJK Digital Financial Innovation aims to provide a platform to connect depositors or savers to financial institutions nationwide, especially BPR (Bank Perkreditan Rakyat or rural banks) which offer a very attractive funding product.

Indonesia has 1,500 BPRs across the archipelago. Although these BPRs are only allowed to channel credit in their respective provinces, they are allowed to source deposits nationwide – guaranteed by the government at ceiling rates of 2.5% higher than those of commercial banks. Yet these 1,500 BPRs combined only account for 1.5% market share of total country’s depositors as most of these BPRs are located in suburban areas and not equipped by digital channels – making their product inaccessible to urban depositors.

DepositoBPR enables societies nationwide to access the highest possible government guaranteed deposit rates from rural banks in any region without having to visit the bank. On the other hand, BPR can source deposits nationwide without incurring the hefty cost of opening additional branches and marketing effort to attract more deposits. In other words, BPR can source deposits regardless of the geographical boundaries and convert their higher fixed operational cost to lower variable fees to Komunal by using DepositoBPR platform.

“We believe strong partnership between funding agent and rural banks will boost the country’s financial inclusion tremendously. As BPRs have relatively smaller assets than commercial banks, they have dynamic changes between lending and funding needs. While we have seen many fruitful collaborations on the lending side, unfortunately BPRs don’t have many options to solve their funding needs although they offer attractive and safe products. During the pandemic, the irony was even clearer as commercial banks are overflowing with liquidity despite offering record low rates whilst many BPR had difficulty sourcing deposits just because 95% of the country’s depositors reside in urban areas. We hope this platform can bridge the gap. We appreciate OJK and BPR Association support and advice to sharpen this “first of its kind” product,” said Hendry Lieviant, Co-Founder of Komunal.

One of the main challenges of the platform is to standardize and optimize BPR’s fragmented processes to ensure depositor’s seamless experience, such as replacing current handwritten signature with digital signature, face-to-face KYC (Know Your Customer) via video call with eKYC vendor, and most importantly improving physical bilyet with e-bilyet, all of these never been done before in rural bank history.

By bringing digitalization into the ecosystem, Komunal is working to launch Indonesia’s first e- bilyet BPR deposit by the end of 2021. “The e-bilyet feature is rather revolutionary in the sense that, up to now, almost all BPR deposits are using physical bilyet/deposit certificate, which means BPR in Bali, for instance, will need to send the physical bilyet to its depositor in Jakarta (and vice versa when the depositor wants to withdraw his/her deposit), incurring relatively high logistics cost in the process. The e-bilyet, which is created digitally, will effectively eliminate this friction and help our vision to make the product accessible nationwide,” said Kendrick Winoto, Co- Founder of Komunal.

To date, Komunal has engaged with 60 BPRs across Java and Bali, and launched the beta version of DepositoBPR services in August 2021. The company focuses on doubling the BPR market share by offering a higher rate, as well as more seamless transactions to new and existing clients.

Komunal has also disbursed US$ 50 million of loans to hundreds of SMEs in Indonesia, more than double the amount compared to the same period last year. The company is committed to continuously support SMEs in getting credit access, targeting US$ 150 million of SME loans by next year. During this pandemic, the company strengthened its cash flow with minimal burn rate as a group – thanks to its lending businesses which has achieved profitability recently.

Willson Cuaca, Co-Founder and Managing Partner of East Ventures said, “East Ventures is a purpose-driven investor, and we use a holistic approach on solving problems. We are proud to double down on Komunal since we share the same vision and purpose. Komunal took financial inclusion to the next level. We have heard that many startups provide solutions to unbanked consumers, under-served consumers and non-credit-worthy micro and small businesses. However none of the solutions address rural banks. Komunal introduced the new concept of “Neo-rural bank” to upgrade and equip smaller banks with advanced capabilities. We hope this approach will accelerate financial inclusion massively and deeper to every Indonesia region.”