Modalku, Pefindo Credit Bureau partner to create more inclusive financial ecosystem

  • Collaboration builds momentum for knowledge and experience sharing
  • The partnership gains Modalku access to Pefindo’s credit reports


Modalku, Pefindo Credit Bureau partner to create more inclusive financial ecosystem


MODALKU, a peer-to-peer (P2P) lender in Indonesia, and Pefindo Credit Bureau, a credit information organisation, have announced a collaboration to build a more efficient and data-driven P2P lending infrastructure so more people will have access to quality financial services.

The partnership gains Modalku access to Pefindo’s credit reports, consisting of credit history, credit scores, and applicant borrowers’ backgrounds.

Information from Pefindo Credit Bureau will add to Modalku’s database, making credit analysis more refined and accurate.

With a faster and more accurate credit assessment process, Modalku can support more quality local Micro, Small, and Medium Enterprises (MSMEs). MSMEs without financing history in the national database system can qualify for credit access.

The partnership also builds efficiency while lowering risks for lenders, as Pefindo Credit Bureau’s reports can be utilised in the loan assessment process to reduce risk of default.

Indonesian MSMEs lack sufficient working capital loans to expand their businesses. According to OJK data, there is an annual credit need of 1.7 trillion rupiah for Indonesian MSMEs.

Existing financial institutions currently only have the capacity to cover 700 trillion rupiah of that need, creating an annual lack of financing of one trillion rupiah per year for local MSMEs. The situation is not only detrimental to small businesses, it also weakens the national economy.

A study by Oliver Wyman and Modalku finds that lack of financing access for Indonesian MSMEs with potential to grow created a 14% loss of total national GDP in 2015.

P2P lending can answer the needs of local MSMEs by widening access to working capital financing in Indonesia. Platforms such as Modalku connect potential MSMEs and those searching for alternative investments through a digital market.

By financing MSME loans, Modalku lenders get an alternative instrument with returns up to 35% per year, while MSME borrowers receive up to two billion rupiah in business loans with no collateral requirements through a fast and simple online process.

Because P2P lending’s credit analysis focuses on financial health, not collateral, P2P loans are suitable for the MSME segment, many of which lack sufficient assets for secured loans. P2P loans’ short-term tenors and fast processing, from application to disbursement, are also aligned for MSME needs.

Through P2P lending, growing MSMEs can start applying for and receiving working capital loans to build credit history. The more an MSME grows, the more financial products it can access, including bank loans.

Progress of the MSME sector and synergy between the banking and P2P lending industries will support a healthy and inclusive financial ecosystem. Additionally, P2P lending creates an accessible alternative investment for the Indonesian society.

Hendrikus Passagi, director of Regulation, Licensing and Supervision of Financial Technology at the Financial Services Authority (OJK), stated that the partnership between Modalku as a fintech lending provider with Pefindo Credit Bureau as an organisation which assesses credit risk of individuals and institutions is a collaboration model that, in the short term, will create a healthier fintech ecosystem.

In the longer term, it can maximize support for a digital economy ecosystem, which includes the e-commerce industry, one of Indonesia’s future economic strengths. The collaboration also builds momentum for knowledge and experience sharing.

Pefindo Credit Bureau has strong experience in analysing credit risk profile based on past finances. Meanwhile, Modalku with its information technology and advanced algorithm, has advantages in analysing risk profile based on available public information from various payment systems, telecommunication providers, social media, and online shops.

“The partnership will create a data exchange mechanism that will improve the credit risk analysis quality of both parties. We urge Fintech lenders to follow this collaboration model,” added Passagi.

Stefanus Warsito, chief risk officer of Modalku, said “Indonesian MSMEs have a high need for financing. The banking industry has done its best to provide loans for the segment and the emergence of P2P lending will offer an alternative financing solution to support MSME business development.

“When the P2P lending and banking industries work together, they can support financial inclusion and the Indonesian economy. We want to provide the best to both user sides of Modalku, borrowers and lenders. We have utilised advanced technology and alternative data in credit analysis, but we always want to do better.

“Our collaboration with Pefindo will increase the quality of P2P lending infrastructure, as it will become easier for us to spot high-quality and creditworthy MSMEs. Our partnership increases security for lenders as well. In addition, Modalku and Pefindo are working a pilot project supported by OJK.”

Yohanes Arts Abimanyu, president director of Pefindo Credit Bureau, stated: “Pefindo’s vision is to expand access to inclusive financing for all industries, including for Indonesian MSMEs. A wider financing access will fuel MSME business growth and expansion. Pefindo Credit Bureau and Modalku has the same vision; we want to create financial inclusion in the country and support the local MSME sector.

“Because of the similarity of our vision, we completely believe in this partnership. We hope our accurate and value-added credit data reports can support the progress of Indonesia’s financial ecosystem. With our services, we want to help make unbankable MSMEs into bankable businesses.”

Abimanyu adds, “Through the information we provide, one can thoroughly and quickly review an applicant borrower’s credibility from his credit history to facilitate easier loan assessment. Our services are supplemented by credit score, information on an applicant borrower’s risk category, and probability of default, which can reduce the rate of non-performing loans while increasing operational cost efficiency.

“Our reports in individuals reflect their credit reputations, building positive behaviour and financial responsibility. They also act as control mechanisms for data accuracy.”

Modalku is the largest P2P lending platform in Indonesia and Southeast Asia. Modalku also operates in Singapore and Malaysia under the name Funding Societies. On a regional scale, Modalku has crowdfunded more than 960 billion rupiah into more than 1,720 MSME loans in Southeast Asia. Since early June 2017, Modalku has been officially registered at the Financial Services Authority (OJK).


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