1. Startups

Honest Builds Public Financial Discipline Through Credit Cards

Honest's board of directors discussed the reason credit cards became an "entry point" right at their debut in Indonesia

Honest made its debut in the Indonesian financial industry through a numberless credit card (numberless) in March 2023. It has been two years since he completed the completion of the acquisition transaction while simultaneously carrying out a complete transformation of the company.

This transformation follows the acquisition of Honest Financial Technologies International Pte Ltd (Honest Bank) of PT Sahabat Financial Keluarga (SFK), which is a finance company owned by PermataBank. SFK changed its face to become PT Honest Financial Technologies which houses Honest's credit card products.

Honest Bank founded by Peter Panas and Will Ongkowidjaja. Will is one of the Founding Partners of Alpha JWC Ventures. Through SFK, Indonesia will become its priority market, followed by expansion to Thailand.

"In 2022, we focus on transformation because Honest is not digitally native company. We transform processes, organizations, to customer interactions. When we proceed [to get] product approval in mid 2022, our mission is very simple that we are ready to serve the market in Indonesia," said Main Director Dharu Estiningrum in an interview with DailySocial.id.

Build credit history

Even though it operates as a financing company with a previous license, Honest actually released a credit card as its first financial product. In issuing credit cards, Honest has received a license as a payment service provider from Bank Indonesia (BI).

According to Dharu, credit cards are becoming entry point because it serves two important aspects of people's lives, namely as payment instruments and loans. In addition, credit cards also offer consumers full flexibility in paying bills.

"If it's only payment, we can't help consumers [build] credit history. We build discipline in our users so they can be ready for the next loan product. To be able to rise to the level of a better life, they need financial services from formal financial services institutions. Therefore, our approach is different," he explained.

On the same occasion, Risk Director Sanjay Nandrajog added that credit cards are a unique individual product because they have payment capabilities. With its capabilities, it can build a credit track record.

The market potential is also large because credit card penetration is still very low. Based on data from Bank Indonesia (BI) as of June 2022, the number of credit cards in circulation in Indonesia has only reached 16,58 million units. Meanwhile, population unbanked in Indonesia it reached 97,74 million according to World Bank data.

Different approach

By understanding the market, continued Sanjay, his party was very careful in developing the product because it was targeting a very specific target market, namely people who do not currently have a credit card. Likewise, building company discipline in providing credit and how to carry out collections.

This is also carried out in designing products that are easy to understand and use, and conveyed in people's everyday language. This is reflected in the absence of number components on the physical card, both credit card numbers, expiry date, to CVV/CVC to reduce the risk of data being spread.

The claim is that the Honest Card is the first credit card without a number in Indonesia, as well as the first card in Indonesia that can be used for transactions with the "Tap for Pay" feature based on NFC technology.

"The intention, for those who don't have access to credit cards, we are now bringing to a formal credit place, to build a good credit history, such as a motorcycle or car loan, or housing loan. We take it very seriously. That's why we have to learn first, and constantly test and learn," said Sanjay.

The new Honest is available for Android users who are the majority device population in the Indonesian market. Based on our monitoring over the last almost 2 months, Honest has received more than 10.000 downloads.

Currently, the party is still focused on encouraging the use of the Honest Card in the market. In the future, Honest will also enter other financial products in the financing sector.

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