Problems Fintech is Trying to Solve for the "Unbankable" in Rural Areas

The large number of people in rural areas who have not been touched by banking financial services and other financial institutions is one of the reasons why fintech present a solution. They debuted offering fairly basic products, such as credit vouchers, PPOB payments, fund transfer services to money loans. Unlike banks, they make micro-businesses such as shop owners as agents to bridge transactions.

As one of the Indonesian startups who are fully aware of this opportunity, Payfazz want to be a financial service that is almost similar to banking. However, without having a branch office and relying solely on technology, the concept is claimed to be the most effective for people living in rural areas.

In this #Tuesdaystartup session, the Co-founder & CEO of Payfazz Hendra Kwik explained some interesting facts and reasons why there are currently many Indonesians outside Java who do not have an account, savings or opportunity to get capital for their small business.

"With the services we have, it is hoped that more SMEs in rural areas will have the opportunity to develop their businesses which will have an impact on the surrounding community and directly improve the living standards of people in rural areas."

Limited access

Based on the results of research entitled The Future of Southeast Asia's Digital Financial Services conducted by Google, Temasek and Bain & Company, at least 92 million adults in Indonesia not touched by financial services(unbankable).

People in urban areas can easily come to banks or other financial institutions. Meanwhile, for people who live in remote areas, it is difficult to get financial access. From the service provider side, there are sometimes obstacles, for example having to spend a large amount of capital to set up a branch office in the area.

For this reason, Payfazz believes technology can fill this gap. By cooperating with agents, most of whom are grocery store owners, can simplify all processes of using the application. Not only buying credit, through the technology currently available, people living in rural areas can also get the opportunity to borrow capital, save money and others.

"For financial products, very accurate data is needed, for that through our agents we continue to provide education to the public so that they can provide the right data and are accustomed to accessing technology using applications on smartphones," said Hendra.

Saving awareness

There are still many people in rural areas who are not accustomed to saving the results of their efforts, and spending all their harvests or business directly, which is often a problem and is often found in rural areas. Through its technological innovation, it is hoped that it can teach more saving habits among rural communities, by utilizing scattered agents.

Currently, there are still many rural communities who keep their money at home and are reluctant to save in a bank because of the limited banking services available in remote villages. Utilizing an agent they have, of course, can simplify the process, as well as help them get used to saving money and not doing the old ways in terms of financial planning.

"Currently around 64% of people in Indonesia never save money, as a result when there is a disaster their money is lost because they only keep it in cans in their homes. Seeing this phenomenon, we see there is an urgency to provide the same access to banking as in cities big to be applied in the regions," added Hendra.

Technological innovation

Starting from only providing a limited number of products, Payfazz now provides various financial services for people in rural areas. Trying to replace the position of bank branch offices which are still very minimal in number.

Payfazz currently has 450 thousand agents. This financial application makes it easy for SME owners to offer a variety of financial products, including for PPOB, bill payments, fund transfers, cash withdrawals, to credit payments. The contribution of PPOB alone every month almost touches Rp. 1 trillion.

"Our focus from the beginning until now has been tocater communities in rural areas who still underprivileged and excluded from banking services. We hope that we can provide services to more people in rural areas not only for their personal financial needs but also to develop their businesses even more," explained Hendra.