Honest Gets Strategic Investment from Japanese Financing Company "Orico"

Honest Financial Technologies International (Honest Bank) received a strategic investment from Orico, a consumer finance company from Japan, as reported by Nikkei Asia. Through this investment, Orico will make its debut in Indonesia by launching a virtual credit card. Based on the data reported to Venture Cap, the nominal amount injected was USD $ 2 million or IDR 30 billion.

Known as Orient Corp., Orico is a group of companies with a track record in cooperative financial services. First launched in Hiroshima in 1954. Meanwhile, virtual credit card products Orico and Honest are targeted to launch this year.

Operations will involve artificial intelligence to perform credit checks, confirm cardholder identities with video chat, and prevent fraud. Users can get a card within three minutes, without having to pay an annual fee. In addition, there will soon be a QR code payment service linked to the card.

For information, Honest Bank is a digital startup and open banking from Singapore which was founded by Peter Panas and Will Ongkowidjaja (Founding Partner Alpha JWC Ventures) in 2019. Honest Bank has received investment from a number of investors, including XYZ Capital, Village Global, Insignia, Global Founder Capital (GFC), Alpha JWC Ventures, Digital Horizon, to Alumni Ventures.

To debut in the Indonesian market, Honest Bank acquired a majority stake in PT Sahabat Financial Keluarga (SFK), a finance company owned by PermataBank, and rebranding to PT Honest Financial Technologies. In March 2023, PT Honest Financial Technologies introduced the card unnumbered credit(numberless) which can be used through smartphone.

In Indonesia, Honest operates with two business licenses, namely as a payment service provider from Bank Indonesia (BI) and a finance company supervised by the Financial Services Authority (OJK).

In the last interview with DailySocial.id, Main Director of Honest Dharu Estiningrum revealed the credit card to be 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," said Dharu.

Credit card market

In Indonesia, the trend of using credit cards is said to have fluctuated in recent years. Penetration of credit card users in Indonesia is only 6%, the lowest compared to several other Southeast Asian countries. Bank Indonesia (BI) noted that the number of credit cards in circulation in Indonesia reached 16,58 million units in June 2022.

Credit card transactions during the Covid-19 period also decreased, but the transaction value was observed to increase. BI recorded the value of credit card transactions in Indonesia at IDR 34,37 trillion in March 2023. The number increased by 10,18% compared to the previous month (month-to-month), which amounted to IDR 31,20 trillion.

In increasing transactions via credit cards, BI has issued several policies. First, reducing the maximum credit card interest rate limit from 2% to 1,75% per month, effective from July 2021. Then, extending the validity period of the credit card late payment fine value policy by 1% or a maximum of IDR 100.000,00 from the original 31 December 2022 to June 30, 2023.

Most Indonesian credit card holders are said to have an annual income of over 500 million, which is considered high income. While the middle class has less access to credit cards, QR code payments have become a popular alternative. The concept of shopping using paylater is also on the rise.