Startups are expected to help digital transformation run seamless: Benedicto Haryono, Co-founder & CEO of KoinWorks

In 2021, the value of Indonesia’s digital economy has reached US$ 63 billion and continues to grow and is estimated to reach US$ 360 billion in 2030. How do startups play an important role as a catalyst for digital economic growth?

Startups do have important roles but on a different scale. We used to look at startups as the first catalyst since the digital economy was not as big as it is now. We now realize that startups are not the only player and catalysts, they also act more as facilitators.

We look at the financial industry, and have also embraced digitalization. Other industries are also getting digitized. However, one important note is that startups are the top leaders which can hopefully give guidance so other industries’ transformation can go smoother.

In addition, policies have more impact nowadays compared to 3-5 years ago. Back then, the government might not be as aware as they are now, and the policies made would not be as impactful. Hopefully, startups can be more proactive and the government can be more open to discussions.

The global economy is facing a multidimensional crisis or ‘the perfect storm’ because of global recession, energy crisis and geopolitical tension. What are KoinWorks’s strategies for weathering this condition? 

We don’t think that far, but of course, there will be macroeconomic changes that need to be anticipated. For example, we created a more intensive portfolio compared to the previous year. We are also seeing changes in customer behavior. For example, merchants who are starting to go back offline. They have an online channel and are starting to go back offline to keep growing to keep up with consumers who have returned to shopping online and offline.

First, the industry is certainly shifting. Secondly, the macroeconomic conditions require us to be more defensive rather than aggressive towards the press. The third thing is the liquidity that is changing from digital investors. So, we are looking for more strategic partnerships with investors and financial institutions. From the investor side perspective which may not be that impacted by the global conditions. So hopefully, we can start cooperating with them next year. 

In the midst of rapidly growing digitalization, digital and physical infrastructure are still uneven in Indonesia. How is KoinWorks taking advantage of this opportunity to promote digital equity and digital economic growth in Indonesia’s tier 2 and 3 regions?

We see this as both an opportunity and a problem. Opportunities are definitely there, but there are still gaps that we can fill. So, our strategy for next year is to enter into tier 2 and 3 areas and target small and micro levels. In the next two years, we will create a special strategy for small and micro levels in tier 2 and 3 areas. 

On the other hand, we see that fintech infrastructure issues are quite vital because they are key for us to serve users well, for example KYC and customer behavior checks. This is a problem and of course also requires the readiness of the government.

Startups bring forth innovations in technology with real impacts for the digital economy and collaboration is one important element in it. How does KoinWorks carry out these collaborations to grow a sustainable digital ecosystem?

We are quite passive. Since we are focusing on financial services, we were not really building KYC tools or infrastructure. What we are building is an environment that is well-connected to our partners. We are in the middle of building a better API infrastructure so better partnerships can be created and we can provide our solutions there. But I think we are not building the basic infrastructure. What we need more is a more solid foundation.

KoinWorks launched KoinWorks NEO to support MSME transformation. How is the sustainability of the program in strengthening digital potential and competitiveness in the region?

So far it is pretty good. Around 100,000 people have signed up at a 50% rate. Our focus for next year is the betterment of infrastructure. We have services and infrastructure to cater to our customers. We customize their user experience, but what proves to be the main problem is our reliability which depends on our partners’ providers or on our own providers. Sometimes there are interconnectivity issues or situations where we have to have another backup provider if one provider is down. So, looking at it, we do not have full control of partners’ or providers’ ecosystems. Therefore, we cannot expect the same levels of SLE solutions or transitions which we possess internally compared to the external ones. That is where we have to decide if we want to build backup providers or partners so customers’ transactions can go smoothly.

The Non-Performing Loan (NPL) ratio is expected to increase amid the global situation and the threat of recession. What is the strategy prepared by KoinWorks in dealing with this situation?

First, we are more into basic materials. Consumers definitely use it, maybe they consume less but not less. We also have several sectors that we don’t touch at all. One of them is property assets because the rising life environment is also quite bad for the property. 

On the other hand, we have also strengthened collection capability, not only in terms of under-rating but also in a collection. Second, of course, we also want to continue to develop internal governance so that the collection team can work well. 

Resilience depends on the abilities to adapt in various conditions including when disruptions take place. What kinds of business models and digital talents are needed to continuously unlock new digital economy potentials?

If the business model doesn’t change too much, but by entering the small and micro sectors, the main strategy is related to financing. We want to supply goods directly instead of giving cash. When we give cash to the micro level, their risk of default is higher because they like to be ambitious about things.

Second, labor has always been an issue. The first option is, ideally recruiting experienced and idealistic HR. However, this takes a lot of time. The second option is to train and develop our human resources so that they are close to the ideal level we want. I think we are now entering the second option because the first option is too expensive. We hope that our training and development program will be more structured.

The inclusive digital economic growth agenda is also marked by alignment with SDGs through the application of ESG, how is it implemented at KoinWorks and what are the challenges faced?

What we have been doing is very impactful for a lot of MSMEs, but we have not seriously measured the impact. In terms of the environment, the impact generated by KoinWorks is more social than the environment. This is because for now, small and micro businesses don’t really care about the environment because they are more focused on supporting their families. That doesn’t mean we don’t present a green business. We have a related portfolio, but indeed next year we need to present a related program.

One supporting instrument of digital economic growth is the protection of consumer rights. How do you see the Personal Data Protection Act in encouraging the digital ecosystem?

I haven’t seen the entirety of the Act, but I was pretty disappointed with the government policies judging from the summary. The government’s most important focus should be to build or provide certain standards for data interchange, where data owners can choose to share data with other parties for certain purposes. However, what the government is putting more emphasis on is sanctions. So it seems that now the focus is more on emphasizing data security, not data ownership.

We at KoinWorks also emphasize data security, but in my opinion, this is only a cost at the moment but we don’t see any value from a business standpoint.

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