Modalku Group hits US$74mil in total crowdfunded MSME loans
By Digital News Asia January 11, 2018
- Indonesia is its biggest market with over 50% of total loans crowdfunded to local MSMEs
- P2P lending business model widens MSME access to working capital loans for business growth
MODALKU Group, pioneer of peer-to-peer (P2P) lending in Indonesia, welcomed the start of the year by reaching the Rp 1 trillion (US$74.39 million) mark in total crowdfunded MSME loans across Indonesia, Singapore, and Malaysia since its inception.
The achievement puts the company’s business growth throughout 2017 as nine times the growth of 2016.
Indonesia is Modalku’s largest market, where more than 50% of total loans, or around Rp 520 billion has been crowdfunded to local MSMEs.
Modalku Group’s total crowdfunded loans is the highest amount reached by any P2P lending platform in Indonesia and Southeast Asia.
The number is also financial technology’s contribution towards national financial inclusion efforts and for the MSME segment, which lacks sufficient access to working capital loans.
Modalku received many awards and accolades in 2017, from global to local organisations. At the end of September 2017, Modalku won the Global SME Excellence Award from ITU Telecom, one of the United Nations’ special agencies. Modalku is the first and only Asian startup to win the award.
The company was also included in CB Insights’ Fintech 250, a select list of the top fintech companies around the world working on groundbreaking financial technology. Daily Social’s 2017 fintech report shows that Modalku is the top fintech lending service in Indonesia. The awards display global recognition of fintech solutions’ positive impact for society.
Modalku connects potential MSMEs and those searching for alternative investments through a digital market. By financing MSME loans, Modalku lenders get an alternative investment with attractive return rates, up to 35% per year.
Meanwhile, MSME borrowers receive up to Rp 2 billion in business loans with no collateral requirements through a fast and simple online process. Modalku’s P2P lending business model widens MSME access to working capital loans for business growth.
P2P lending also supports financial inclusion efforts by providing financial services to those previously underserved.
According to OJK estimates, there is an annual need for Rp 1,700 trillion in MSME credit in Indonesia. Financial institutions can currently fulfil Rp 700 trillion of that need, creating a yearly financing gap of Rp 1,000 trillion for Indonesian MSMEs. The situation is not only detrimental to small businesses, but 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. There is a need for alternative financing sources for Indonesian MSMEs, especially because MSMEs are the nation’s economic backbone, with contribution to 60.34% of total Indonesian GDP and 97% of national employment.
Reynold Wijaya, co-founder and CEO of Modalku, states, “We are very proud of Modalku’s achievements throughout 2017, especially to receive global acknowledgement that we provide positive value for Indonesian society while supporting national financial inclusion efforts.
“Of course, we would not have been able to attain our accomplishments without the support and trust of various parties, including the public, the Financial Services Authority (OJK) and our lenders and borrowers. We are both grateful and motivated to be even better in 2018. We want to support more deserving MSMEs, in Indonesia and Southeast Asia.”
Hendrikus Passagi, director of Regulation, Licensing and Supervision of Financial Technology at the Financial Services Authority (OJK), said: “Online gotong royong financing or FinTech P2P lending has disbursed more than Rp 2.5 trillion in loans throughout 2017, the number includes Modalku’s contribution.
“This is an excellent first step for fintech’s support of financial inclusion in Indonesia. OJK hopes that the online gotong royong financing model will offer more financing support towards the agriculture, fishery, and MSME sectors, which needs more support from the financial industry.”
Modalku opened operating offices in Bandung and Surabaya, and launched partnerships with TaniHub, Indonesia’s largest agricultural marketplace startup, and Pefindo Credit Bureau, a highly-regarded credit information organisation.
Modalku, Pefindo Credit Bureau partner to create more inclusive financial ecosystem
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