Skip to content

flower Worldwide report on buy now pay later market

Download Now

Indonesia’s state-owned fintech service provider trusts Artha to finance the working capital needs of SMEs and warungs in the country

Business problem

In 2021, Indonesia accounted for more than 62 million Small and medium-sized enterprises (SMEs), including neighborhood shops known as warungs. During that year, country’s banks and financial institutions were only able to offer around 6% of the total financing required by these SMEs. This widened the financing gap for the country’s SMEs to USD 175 billion in the same period. A state-owned fintech company intended to create a digital lending platform with the goal of providing faster credit access to millions of small and medium-sized enterprises (SMEs) throughout the country. The project was of high relevance for the country as SMEs have always been a strategic driver for Indonesia’s economic growth, as they accounted for over 62% of the total economic output and provided employment for more than 95% of the total workforce in 2021.

Business analysis

Arttha was selected by the company to enhance and strengthen its position as an innovative financial services provider in Indonesia. The project requirements involved modernizing client’s financial services offerings, enabling quicker credit access for SMEs, reinforcing their digital growth strategy, and promoting financial inclusion throughout the country. Arttha’s project team identified and analyzed the client requirements to plan and strategize on the deliverables that included creating a reliable digital lending platform with an easy-to-use interface that could be used by SMEs to access credit quickly. Besides, the platform must also be equipped with predictive analytics models to access the creditworthiness of SMEs, ensuring faster and responsible processing of loan applications.

Our solution

Our team implemented a core digital lending platform for the client, that could streamline and accelerate the entire loan lifecycle management process. With its easy-to-use interface, the platform expedited and simplified the loan origination process for Indonesian SMEs, while also maintaining a secure environment. The platform was equipped with a parameterized credit decisioning engine to enable the client not only to expedite credit decisions with an improved accuracy, but also to reduce their operational costs by automating manual data-entry and identity-verification tasks. To further enhance the platform’s capabilities, our team integrated it with PEFINDO, Indonesia’s oldest and most trustworthy credit rating agency. This integration could enable the client to generate risk scorecards in real-time, allowing them to evaluate and monitor SMEs’ creditworthiness instantly. Arttha’s core digital lending platform for the client also ensured timely repayments through an interface that allowed SMEs to communicate their repayments schedules electronically, thereby reducing transaction cost and potential losses.

The results

Boosted digital engagement for SMEs across Indonesia

Streamlined access to working capital finance for SMEs in Indonesia

Maximized efficiency in the SME lending process

End-to-end automation of the digital lending process

Delivered working capital loans to more than 3.8 million SME merchants and warungs in the country

Get in Touch mail-icon