Modalku and Carro Announces "Co-Investment" to Bank Index
This collaboration supports Modalku's business strategy to enter the neobank industry
Modalku Group (known as Funding Societies in Singapore, Malaysia and Thailand) partners with automotive trading platform, Carro, announced a co-investment in PT Bank Index Selindo (Bank Index). The value of this joint investment is still undisclosed.
In the official statement, Modalku's Co-founder & CEO, Reynold Wijaya said this collaboration is to support Modalku's business strategy to enter the neobank industry. In addition, he considered Bank Index to be the right partner to empower and develop MSMEs.
"Since 2015, Modalku Group has been a partner in the banking industry in all of our operational areas. The partnership with Bank Index will bring fintech and banking collaboration to a higher level. We want to support MSMEs across banking, payments, loans and digital services," Reynolds said.
Carro Indonesia's CEO, Jeremy Ong agreed on this co-investment step to be the native option to be part of the journey to build capabilities and infrastructure in the automotive ecosystem, both in terms of purchasing, MSMEs, to insurance.
Previously, Carro has entered the ranks of Allo Bank investors with Bukalapak and Grab.
On a general note, Bank Index is a private bank with 52 office networks in Greater Jakarta, Java, Sumatra, Bali and Batam. Bank Index focuses on the MSME segment and operates in the commercial supply chain.
The Modalku Group is a funding platform for MSMEs in Southeast Asia that has licenses in Singapore, Indonesia, Thailand, Malaysia, and currently available in Vietnam. Modalku offers loans of up to IDR 2 billion for MSMEs who have difficulty with business capital.
According to the latest data, the Modalku Group has disbursed around Rp33.02 trillion business loans with through 5 million MSME loans.
Financial inclusion through neobank
Some fintech players are also announcing their collaboration or synergy with banks. The purpose of this act is none other than to expand financial services, especially to the MSME and unbanked segments.
Previously, KoinWorks partners with Bank Sampoerna to launch the neobank service, KoinWorks NEO. At that time, KoinWorks' Co-founder & CEO, Benedicto Haryono said that neobank was the first gateway to increase MSME capabilities, which were still underserved and underbanked, before advancing to a higher level and worthy of access to credit.
As summarized in the AFTECH 2021 Annual Report, OJK noted that the financial literacy index in Indonesia rose 8.3% from 29.7% in 2016 to 38% in 2019. The growth of this index indicates the importance of expanding fintech services to rural areas. Meanwhile, 69% of fintech players have served this area.
However, Indonesian fintech players still facing big challenges to expand their business outside Jakarta, where 23% and 19% of respondents admit that it is difficult to expand outside Java and rural areas due to financial literacy (55%), infrastructure (44%), and culture (20%).
Meanwhile, this report states that fintech services in the neobank, IKD, wealth management, and securities crowdfunding categories are still in a growth phase due to new regulatory factors for banks, especially those related to digital banks, therefore, market development is not optimal in terms of product and service offerings.
However, these four categories are considered to finally raising traction in the market in line with increasing efforts by players in the financial ecosystem to expand financial inclusion beyond tier 1 cities.
– Original article is in Indonesian, translated by Kristin Siagian