BukuKas Wants to Develop a Digital Bank after Receiving Funding

A digital finance management startup for Micro, Small and Medium Enterprises (MSMEs), BukuKas earned investment of US$ 10 million or around IDR 142 billion early this year. The fresh funds will be used to develop end-to-end software that supports MSMEs and build digital banks.

This Series A funding is led by Sequoia Capital India. BukuKas has also raised US$ 22 million in fresh funds, including from previous investors such as Saison Capital, January Capital, Founderbank Capital, Cambium Grove, Endeavor Catalyst, and Amrish Rau.

The CEO and Co-Founder of BukuKas, Krishnan Menon, said that the cash injection is planned to be used to accelerate merchant acquisitions, strengthen BukuKas’ engineering and product teams in its two offices, namely Jakarta and Bangalore, India.

BukuKas will also expand the range of services offered to merchants in line with the company’s vision to provide comprehensive software for small and medium enterprises.

The Co-Founder and CEO of BukuKas, Krishnan Menon, said that the company’s vision is to provide end to end software to digitize SMEs. “Assisting them in various activities as a prequel to building a digital bank that focuses on SMEs,” he said as quoted by TechCrunch, Tuesday (12/1).

MSMEs are the backbone of the Indonesian economy because they contribute around 60% of the Gross Domestic Product (GDP). The appeal certainly has a positive impact on BukuKas, which provides business digitization technology solutions.

Will Introduce New Features for Users

As of November 2020, this startup also has 3.5 million registered users consisting of small traders and retailers. Meanwhile, the number of monthly active users or MAU exceeds 1.8 million. BukuKas focuses on MSMEs in small cities in Indonesia.

About 73% of its users live outside a tier-one or tier-one city like Jakarta. The startup claims transactions reached US$ 17.4 billion per year. Its value is equivalent to more than 1.5% of Indonesia’s GDP.

The startup also plans to launch a digital payment service this month. By the end of 2021, BukuKas will also introduce new features including ‘tools’ for online storefronts, promotion engines, and social media sharing.

“With Covid-19, SMEs are in a rush to digitize businesses, but they don’t have the right mobile ‘tools’ to sell online or manage businesses,” said Menon. However, he did not specify his plans to build a digital bank.

The Regulations Regarding Digital Banks are Being Prepared

Meanwhile in Indonesia, the Financial Services Authority (OJK) is preparing regulations regarding digital banks. Several banks such as BCA and Gojek have entered this business. Previously, Head of the OJK Institute, Agus Sugiarto, considered neobank or digital banking services without physical contact (virtual banking) to be very promising.

The reason is that internet users in Indonesia are nearly 200 million people. In addition, based on the OJK survey, Indonesia’s financial inclusion index is only 76.19%. “The potential is enormous,” said Agus in an online discussion entitled “Traditional Bank vs Neobank”, last September (17/11/2020).

During the Covid-19 pandemic, people have also become increasingly accustomed to using digital services. “Lastly, the potential is huge because there are no neobank officially operating in Indonesia,” said Agus.

BukuKas was launched in December 2019 and incubated by Whiteboard Capital and since then has continued to carry on the vision of empowering small businesses in an unprecedented level of visibility, control and all-around convenience.

In just one year since its launch, BukuKas has become the leading platform for managing finances and businesses of MSME players in Indonesia. The company’s strategic action in acquiring the Daily Financial Notes application in September this year also made BukuKas even more agile in expanding market share while strengthening their leadership position in Indonesia.