Super financial app KoinWorks provides financial inclusion to SMEs amidst pandemic

The master work of two Fintech virtuosos, Benedicto Haryono and Willy Arifin, KoinWorks was established with two goals in mind. The first objective is to help individuals and businesses actualize their financial goals, and the second one is to bring forth an application that caters to various financial needs and most importantly, is convenient to use. 

Ever since its inception in 2016, KoinWorks has gone above and beyond to provide financial inclusion to every layer of Indonesian society through peer-to-peer (P2P) lending. This year, in particular, the financial super app puts more emphasis on making online financing more accessible to SMEs. This focus definitely does not come out of the blue, proven by the number of loan requests proposed by SMEs that have gone up 32% during the pandemic. 

“Our vision is to enable people in Indonesia to better capitalize on opportunities through financial inclusion. KoinWorks seeks to provide SMEs access to financial tools to enable them to better fund their expansions, do transactions faster, procure supplies with ease, leverage transactions with clients and manage treasury. All of these are done through the power of technology and data,” said Benedicto Haryono, CEO and Co-founder of KoinWorks.

The mission to provide financial inclusion is also backed up by the fact that SMEs are untapped markets and there is a funding gap amounting to US$80 billion for them. Currently, the Indonesian banking industry has only taken on half of these bankable markets. However, the banking industry is not the only one who should shoulder the weight, as various support from relevant stakeholders will help accelerate the digital economy in Indonesia. 

This focus of KoinWorks echoes the main point made by The East Ventures Digital Competitiveness Index (EV-DCI) 2021 which stated that COVID-19 has propelled and expedited digital transformation for businesses to stay afloat. One party that could really gain momentum and put digital transformation to good use, according to the research, is SMEs. 

Digital transformation is lucrative for SMEs because SMEs dominate the total of businesses in Indonesia, yet out of 64 million SMEs, only 12 million have taken the advantage of going online. This is where KoinWorks steps in to educate SMEs about digital financial services. What is more, this point is later supported in the EV-DCI research that Fintech is one industry that is thriving during the pandemic. Not only are people using the Internet for marketing their products, they also utilize it to gain access to financing. 

The rise of super financial app

2016 was the year KoinWorks was brought to life. Living by the tenet that everyone can actualize their financial dreams through one digital platform and a device in hand, this app started out with two main services: KoinP2P and RoboLending (now known as ‘KoinRobo’). KoinP2P is a peer-to-peer lending service where investors lend their money to borrowers consisting of individuals or MSMEs, while KoinRobo allows investors to make more of a social impact by letting them choose which particular parties or businesses they want to lend the funds to. 

As of February 2021, KoinWorks has amassed more than 657,156 users. Since it was established until now, KoinWorks has loaned approximately IDR 3.82 trillion with an average distribution of IDR 200 to 300 billion per month.

The pandemic does put every company’s innovation and creativity to test, and rather than cracking under the pressure, KoinWorks rises above by launching more extensive services that encompass more comprehensive assets such as KoinGold (gold investment), KoinBond (obligations) and KoinGaji (salary payment). Their adaptability to the changing seasons and continuous commitment to delivering the best products were eventually fruitful, resulting in user growth that grew by 61% despite COVID-19.

The magic does not end there, as KoinWorks’ Chief Operating Officer, Bernard Arifin, explained further that more strategic partnerships are in the works to bring more convenience for SMEs and the society. “We have partnered with a number of institutions, be it banking, B2C and B2B e-commerces, logistic platforms, point of sales (POS) services and everything that makes up the MSMEs’ ecosystem,” elaborated Bernard to Bisnis.com.

Achieving more even distribution outside Java

Since KoinWorks is an online platform, it is only sensible that the highest loan distribution is spread in the provinces with the best digital infrastructure. CEO Benedicto Haryono also specified that the overall loan distribution takes place in the Greater Jakarta area and Java to other islands such as Kalimantan, Sumatra and the rest of East Indonesia.

Jakarta and Java, however, are two areas with the highest loan distribution. There is a considerable gap between Jakarta and Java compared to other islands owing to the fact that these two provinces were in KoinWorks’ first expansion phase. 80% of the businesses that utilize KoinWorks are situated in Java. This does not come as a surprise, as the EV-DCI data also corresponds to this phenomenon. From the top 10 cities with the highest digital competitiveness, 8 come from the Greater Jakarta area and Java. 

One of the many challenges KoinWorks seeks to tackle is to expand their services and reach more remote cities that are outside the metro areas. Although KoinWorks has users from almost all regions in Indonesia, they are looking to make the user distribution more even in other islands besides Java. Sumatra, Kalimantan and East Indonesia are three islands that KoinWorks are particularly focusing on so a more balanced user distribution can be attained. One factor that may contribute to the uneven user distribution might be the concept of digital financial services that are still unfamiliar to many. 

Benedicto made an interesting remark about two areas that will thrive in the long run if they decide to maintain and up their digital game consistently: North Sumatra and Bali. Bali, especially, is in the limelight because it places 4th in the EV-DCI data in terms of digital competitiveness.

Continuously nurturing SMEs despite pandemic and challenges

Before the pandemic striked, KoinWorks has been consistent in their effort to educate remote areas on digital financial services by visiting them regularly. However, the tables have now turned and while access to these areas becomes limited due to COVID-19, KoinWorks refused to stick to the status quo. Instead, they challenge the new normal by holding webinars and collaborating with government institutions such as the Ministry of Tourism and Creative Economy to host socialization and literacy programs. 

Despite other notable challenges such as the data environment in Indonesia that is still fragmented and the lack of certainty, KoinWorks is committed to delivering innovations in their efforts to foster SMEs. One of the many hiccups in getting a loan is lower approval rate, but KoinWorks is able to weather through the problem because of their deep-rootedness with SMEs data across genres, from e-commerce, POS to HR software. This results in KoinWorks’ Pre-Approved Loan feature to ward off those uncertainties.

The pandemic has also strengthened KoinWorks’ mission and commitment to developing SMEs, as demonstrated by a heartwarming story from a longtime KoinWorks’ client who resides outside the metro area, Dedy Liem. He has been a client since 2016 to better his bedding depo. COVID-19 wreaks havoc on SMEs, and Dedy’s business was not exempt from this. To help Dedy’s business, KoinWorks assisted him to restructure the payment scheme of the loan. This step, in the end, made him more at ease to run the business.

“The spirit of fintech has always been about boosting financial inclusion and literacy in Indonesia. Carrying this spirit, KoinWorks is devoted to providing accessible financial services for the underbanked and unbanked,” concluded Benedicto.

“Financial inclusion is key to boost digital competitiveness of every province and improve EV-DCI score overall. We have seen how Koinworks contributed to digital adoption by capturing the unbanked clients with fast growth even during pandemic and that growth was further accelerated during pandemic. Koinworks still has strong future growth potential, as the future of tech, is fintech,” said David Fernando Audy, Operating Partner of East Ventures.