Fairbanc Obtains IDR 209 Billion Debt Facility from Pegadaian

Startups embedded finance Fairbanc obtains debt financing (off balance sheet) amounting to $13,3 million (around Rp. 209 billion) from Pegadaian. These funds will be used to finance more MSME traders.

Fairbanc providing integrated payment tempo solutions for MSME customers that are integrated with AI/ML. The platform is connected to the ERP system of global consumer brands with large merchant ecosystems such as Nestle, and has engaged more than 550 thousand merchants on the platform and more than 200 thousand merchants have received funding.

Thanks to its partnerships with big brands, Fairbanc is able to provide BNPL loans to merchants without the need to apply through smartphone. Companies use credit scoring AI-based that can help process loans microcredit instantly.

This is done by accessing merchant orders and payment track records. Companies can further utilize this data to underwrite loans and boost merchant sales by keeping operational costs low.

According to a survey conducted by Unilever, as many as 80% of Fairbanc beneficiaries do not have a bank account and around 70% of them are female traders who were able to increase their sales by an average of 35% – thanks to BNPL made possible by Fairbanc technology.

During the signing of the MoU, Pegadaian Chief of Transformation Office Mulyono expressed his appreciation for Fairbanc's solution. "Fairbanc's ability to extract big data at the outlet level by connecting the ERP of big brands and obtaining credit scores using AI and Machine Learning is the main synergy that we highlight," he said, quoting from an official statement, Monday (04/3).

Fairbanc Founder & CEO Mir Haque revealed his plans for greater expansion into Indonesia. As many as 95 million adults in Indonesia still do not have a formal account at a financial institution.

"However, with a growing middle class, an increasingly tech-savvy young population, and a regulatory environment that encourages innovation and entrepreneurship, Indonesia is now home to the largest billion-dollar technology startups in Southeast Asia," said Haque.

Not only that, he also believes that the Fairbanc concept in Indonesia can be replicated in other developing countries to overcome one of the biggest challenges and opportunities: providing access to credit to millions of traders in order to encourage economic revitalization.

Haque admitted that he had explored expansion opportunities to Vietnam and the Philippines through a partnership with Unilever.

Fairbanc was founded in 2019 by Mir Haque, a Wharton MBA who previously worked at many top global companies. The founding team consists of many veterans fintech, such as the former CTO of Kiva, a San Francisco-based microcredit platform that operates in 77 countries and Thomas Schumacher who co-founded California-based emerging markets microlending giant Tala.

In July 2022, Fairbanc raised $4,8 million in pre-series A funding led by Vertex Venture, followed by Asian Development Bank, East Venture, Lippo Group, 500 Global, Accion Venture Labs, and Indonesian billionaire Michael Sampoerna.

It is said that consumer brands that have partnered with Fairbanc are Unilever, Danone, Nestle, Xiaomi, Mayora, Sasa, Sosro, Indofood, and others.

Concepts like Fairbanc are also being worked on by other players in Indonesia, including Modalku and AwanTunai.