Aidil Zulkifli, Digital Alpha Indonesia CEO, the company behind fintech Uangteman after an interview with Jakarta Globe on Wednesday (14/12). (JG Photo / Tabita Diela)

First Local Online Lending UangTeman to Quadruple Reach in 2017


DECEMBER 15, 2016

Jakarta. UangTeman, the first online lending service in Indonesia, seeks to quadruple its lending next year by offering an alternative to people without a bank account in the archipelago.

UangTeman targets to disburse Rp 100 billion ($8 million) next year, up from around Rp 25 billion this year which already four times its Rp 6 billion lending in 2015, said Aidil Zulkifli, chief executive at Digital Alpha Indonesia, the company that develop UangTeman, said.

Launched in April last year, the lending service currently has more than 5,000 unique customers and granted more than 14,000 loans out of nearly 50,000 application. According to Zulkifli, most of his customers — whose income ranging from Rp 4 million to Rp 5 million a month — use UangTeman's service to pay school tuition or to shop before payday.

"They can't afford to wait until the payday so they borrow money for about two or three weeks tops," he said.

UangTeman, which is accessible through its website and Android and iOS applications, provides short-term micro credit to Indonesian consumers. It provides loans up to Rp 2 million for the customer's first application and Rp 4 million for their second or more applications for up to 30 days tenor.

Just like other online lending services — including Doctor Rupiah or its slightly different competitor Kredivo — UangTeman determines applicant's creditworthiness by a data-driven credit risk algorithm. The first assessment will need up to a day, but second applications may be granted in a couple of hours.

"Our plan for 2017 is to no longer target people with a bank account but anyone who already has an e-wallet," Zulkifli. E-wallet refers to digital device and service that allow customer to do transaction or transfer money to other's e-wallet or bank account. Indonesia's largest cellular provider Telkomunikasi Seluler offers the service called TCash, while rival Indosat Ooredoo's with Sakuku.

Zulkifli said he is currently discussing deals with local e-wallet providers, but there has yet any done deal so far. He is counting on Bank Indonesia's new regulation that allows registered e-wallet to contain e-money up to Rp 10 million.

The lending service is a product of Digital Alpha Indonesia, a subsidiary of Singapore-based Digital Alpha Group, which has received a total of $2 million funding so far from several investors, including Alpha JWC Ventures, who also invest in other Indonesian financial tech startups Kredivo, Sepulsa and Modalku.

High risk

Zulkifli, a Singaporean lawyer-turned-fintech executive, knows that the loan his company offers is not cheap. With a 1 percent compounded interest rate a day, customers could have to pay a whopping 34.8 percent interest for a 30-day loan. In comparison, interest rates for credit card cash advance is capped at 2.95 percent a month.

"It's an extremely high-risk business that we're doing," he told the Jakarta Globe. "People also don't realize my cost of capital. It's very high and the market segment that I'm going after do not get a loan from multi-finance nor banks."

Small merchant or employees that need immediate cash, he said, mostly come to loan sharks with around 10 percent interest rate a day. Besides, according to Zulkifli, UangTeman does not collect money from customers. Instead, the company uses money from its investors.

"We're lending people money online without any guarantee, without meeting in person. Has anyone else done that before us here?"

UangTeman is currently only available for residents of Jakarta, Bogor, Depok, Tangerang, Bekasi, Bandung, Yogyakarta, Solo, Magelang, Klaten and Surabaya. The company is expanding to Semarang this month and Batam and Bali in January.

"Next year, we'll have Makassar, Bali, Batam and other cities in Sumatra," he said.