KoinWorks Acquires BPR Asri Cikupa, Founder Controls Majority Shares

Startups p2p loans KoinWorks announced the full acquisition of a People's Credit Bank (BPR) from Banten, BPR Asri Cikupa Karya. This step was taken in order to develop the KoinWorks business in the long term and expand the reach of financing to the MSME segment.

“Affiliation between our BPR unit and CoinWorks will be very helpful in creating innovation for BPRs so that they have the opportunity to grow through their participation in the digital economy," said KoinWorks Co-founder & CEO Benedicto Haryono in an official statement, yesterday (26/1).

Quoting from OJK data as of September 2022, KoinWorks, through two co-founderBenedicto Haryono and Willy Arifin hold full shares in BPR Asri Cikupa Karya, respectively 50,1% and 49,9%. In the previous quarter, the shareholders were controlled by Lydia Lukasanto (73%) and Ang Kie Kwan (27%). Ang Kie Kwan will remain on the board of commissioners along with Boedhi Surjono.

Ben, Benedicto's nickname, continued that the company will slowly increase the core capital of BPRs so that they can level up from BPRKU 1 to BPRKU 3. In this way, more products and services can be provided to the community.

For information, BPR based on Business Activities (BPRKU) 1 has a core capital of less than IDR 15 billion, BPRKU 2 (core capital of IDR 15 billion - IDR 50 billion), and BPRKU 3 (core capital of more than IDR 50 billion).

Providing deposit products

As a first step, the affiliates of these two companies will focus on providing deposit products. The public can open a deposit account directly at the BPR Asri Cikupa Karya office located in Tangerang Regency, Banten, or through the KoinWorks application which has obtained permission from the OJK as a funding agent.

This deposit product is designed with a minimum placement of funds ranging from IDR 10 million to IDR 2 billion with a choice of 1, 3, 6 and 12 month terms. The interest offered is 6,25% in accordance with the amount guaranteed by the Deposit Insurance Agency (LPS). This figure can be said to be competitively higher than that offered by commercial banks for similar deposit products.

Ben also explained the company's plan to continue to explore the behavior and role of BPRs and their customers in a digitalized financial landscape in the context of digital innovation at BPRs. This will be in line with the company's plan to digitize BPR deposit products through affiliation with KoinWorks, the two companies will continue to develop best practices in integrating systems banking with fintech.

"In the future, business growth opportunities will be created for both parties through participation in the digital economy. BPR will also benefit from modern principles that are important for its development," he concluded.

Acquisition of BPR by startup

This KoinWorks corporate move is not the first thing that has happened in the fintech startup landscape in Indonesia. Among them, ALAMI Group acquired BPRS Cempaka Al Amin which has now been converted into one Hijra Bank, Xendit took a stake in BPR Arthakelola Cahayatama and is now known as BPR Xen. Followed by Fazz Financial Group officials who took ownership of shares in BPR Sentral Mandiri, and Communal which officially acquired BPR Prima Dadi Arta from Kediri in April 2022.

Changes were slowly made after they acquired the BPR. For example, Xendit, which released the Nex application, has been released since November 7, 2022 after going through an internal test phase. This application was developed by PT Nex Digital Technology (NTD) in collaboration with PT BPR Xen. Both are part of the Xendit Group. Its inaugural product is the Millennial Savings Account with an annual interest rate of 6%, which is paid daily.

As explained further by Xendit Group Director Rifai Taberi who also serves as President Director of PT Nex Teknologi Digital (NTD), Xendit Group's enthusiasm to create digital bank applications to fulfill the B2B ecosystem does not only require the convenience of a payment system. This is because there are times when businesses, especially those that are still on the SME scale, need aspects of financing and savings to support their business development.

Therefore, Xendit's experiment through the Nex application is in the context of digitizing BPRs so that their products are more easily accessible. This proposition can be considered as a breath of fresh air in the BPR world. According to Rifai, from the outward appearance of the product, Nex is indeed aimed at end consumers, but in fact the target user segmentation is actually Xendit's existing businessmen (merchants).

It should be noted that in order to survive in the digital era as it is now, service and technology innovation is mandatory if BPRs do not want to be eliminated from the banking business map. Unfortunately, not all BPRs have adequate digital infrastructure. Moreover, many BPRs have limited capital, making it difficult to build digital infrastructure, which requires relatively high costs.

Having to compete in the digital world, the path that BPRs tread is increasingly difficult. The micro segment, which has been their main business area, continues to be eroded by the presence of various competitors from the financial world. Even though the competition is very tight, these rural banks have an advantage because of their different business characteristics.

Locality and close emotional connection with customers are added values ​​for BPRs. However, overcoming its weaknesses—as well as relying on its strengths—will make the BPR's attractiveness even brighter. In this way, the function of BPR to advance the region and improve people's welfare will be even greater.