Modal Rakyat Fintech Collaborates with Neo Commerce & Bank Jago

Financial technology startup (fintech lending) Modal Rakyat is aggressively engaging digital banks. After Bank Neo Commerce, now the company has hired Bank Jago, which is supported by Gojek.

Modal Rakyat targets to disburse loans of IDR 50 billion to 100 Micro, Small and Medium Enterprises (MSMEs) in collaboration with Bank Jago. Every business person can get a loan of up to IDR 2 billion with a tenor of up to six months.

Previously, Modal Rakyat collaborated with another digital bank, namely Neo Commerce. Both are also targeting to disburse loans of Rp 50 billion for MSMEs.

The financing provided to MSMEs is a type of invoice financing or PO financing with loans of up to IDR 2 billion.

President Director of Modal Rakyat Hendoko Kwik said, fintech lending requires the support of lenders (lenders) such as banking institutions in order to support the needs of MSMEs.

Therefore, companies are aggressively attracting banks, including digital banks. “We always open up opportunities for collaboration with financial institutions, including banks, Rural Banks (BPR), startups, and the government,” said Hendoko in a press release, Tuesday (15/6).

Has Distributed Loans to Tens of Thousands of MSMEs

To date, Modal Rakyat has 11,946 individual and 15 institutional lenders. Since 2018 until now, the company has channeled a total financing of more than IDR 1.2 trillion to tens of thousands of MSMEs in Indonesia.

A total of 99.6% of loans were disbursed to productive MSMEs. The majority of business actors who get credit in Java are 91.2%. Only 8.8% outside Java.

In terms of sector, 47.78% or IDR 561.3 billion was channeled to technology and information companies. Then 27.52% or IDR 330.24 billion to the trade sector.

Meanwhile, the remaining IDR 308.5 billion is distributed to the architecture and construction, fashion, logistics, health, machinery and manufacturing sectors.

The Financial Services Authority (OJK) noted that more and more fintech lenders have attracted banks since last year. This can be seen from the share of institutional lenders which increased from 0.2% in January to 1.1% as of November 2020.

Institute for Development of Economics and Finance (Indef) researcher Bhima Yudhistira estimates that the share of institutional lenders in fintech lending continues to increase. “It could even reach 2-5% this year,” he said.

Modal Rakyat’s Lenders Quadruple in May 2021

The number of fintech P2P lending lenders or lenders continues to increase in line with the growth of lending.

Capital People’s CEO Hendoko Kwik said, Modal Rakyat lenders as of May 2021 grew four times compared to May 2020. In addition, as of May 2021, funding from financial institution lenders reached 70% of the disbursement value of Modal Rakyat in May 2020.

Hendoko stated that lenders are interested in funding in P2P fintech, including financial institutions that want to develop financial inclusion by cooperating with fintech lending.

Hendoko also said, Modal Rakyat has been proven to be able to maintain the level of non-performing loans of less than 1% so that Modal Rakyat has the confidence to work with several banks and finance companies, such as Bank Jago, Bank Neo Commerce, BRI Agro, Bank Mandiri, and several rural banks.

“In terms of returns, it is slightly higher than bank interest because loans at fintech do not use assets,” said Hendoko to kontan.co.id, Wednesday (16/6).

Hendoko said that the lenders’ yields at the Modal Rakyat have been quite competitive so far. “The projection is that until the end of the year, both institutional and individual lenders will increase by 10% per month with our distribution target of IDR 2 trillion,” explained Hendoko.

In an effort to attract lenders, Modal Rakyat continues to prove technologically competent so that it is very easy for corporate lenders to integrate the banking system with the system in Modal Rakyat.

“In addition, we always maintain the success rate by conducting a prudent loan risk analysis,” added Hendoko.