Communal Pockets Series A Funds of 30 Billion Rupiah Led by East Ventures

Communal as a startup fintech service providers'neobank' for BPR announced the acquisition of series A funding of $2,1 million (approximately 30 billion Rupiah). This round was led by East Ventures with participation from Skystar Capital, both of whom are Communal early investors. The fresh funds will be used to accelerate financial inclusion by strengthening their newest product "DepositBPR".

DepositoBPR is a time deposit savings product with the highest interest guaranteed by the government that can be opened through BPR in any area. On the other hand, BPRs can still accept deposits from all over Indonesia without having to incur large costs for opening branches and marketing activities.

Indonesia has approximately 1.500 rural banks spread throughout Indonesia. The scope of their business is also limited because they are only allowed to extend credit in their respective provinces. However, they are allowed to accept deposits from various regions with guaranteed interest up to 2,5% higher than commercial interest from the government.

However, the contribution of BPRs to total depositors in Indonesia has only reached 1,5% because most BPRs are located in suburban areas. They are also not yet digitized, so their products are unknown and inaccessible to urban depositors.

Through DepositoBPR, BPRs can still receive deposits regardless of geographic boundaries and can allocate lower operating costs for Communal services, using the DepositoBPR platform.

Currently, DepositoBPR has been licensed as a funding agent (funding agent) from OJK under IKD regulation. Funding agents tasked with providing a platform that can connect depositors and borrowers with financial institutions, especially with BPRs, offering attractive funding products.

Co-Founder Communal Hendry Lieviant said that during this pandemic there is still an irony that commercial banks have high liquidity with low interest offers, while BPRs have difficulty accepting deposits only because 95% of Indonesia's depositors live in urban areas.

“We hope this platform can bridge the problem. We really appreciate all forms of support and advice that the OJK and the BPR Association have provided, to hone the first product in this category," he said in an official statement, Tuesday (21/9).

He continued, one of the main challenges in developing DepositoBPR is standardizing and optimizing BPR processes which are currently still fragmented, so improvements are needed to improve depositor experience for the better. For example, changing wet signatures to digital, e-KYC via e-KYC video call, and most importantly converting physical bilyets into e-bilyets. “All of this has never been done in the history of BPR.”

In this regard, at the end of this year Communal will launch the first BPR deposit e-bilyet in Indonesia. Previously, BPRs in Bali had to send physical bilyets to depositors located in Jakarta, and vice versa when depositors wanted to withdraw their deposits. As a result, the logistics costs must be borne by the consumer.

"Through e-bilyet, this problem can be resolved and Communal's vision to make products that can be accessed nationally can be achieved," added Communal Co-Founder Kendrick Winoto.

To date, Communal has partnered with 60 BPRs in Java and Bali. The DepositoBPR product was released in beta last month. Communal targets to double the BPR's market share by offering higher interest rates and providing smoother transaction services to old and new customers.

In addition to DepositoBPR, the company has also disbursed loans for SMEs to date amounting to $50 million (approximately 713 billion Rupiah) for hundreds of SMEs in Indonesia. This figure has doubled compared to the same period last year. With this achievement in mind, the company will increase lending by $150 million (approximately 2,1 trillion Rupiah) until 2022.

During this pandemic, the company claims to have strengthened the company's cash flow by burn rate low thanks to its lending business which has been profitable recently.

Co-Founder and Managing Partners of East Ventures Willson Cuaca added, it is often heard that startups provide solutions to consumers who do not have bank accounts and do not get good services, as well as to small and micro businesses that do not have credit. However, no one has yet provided a solution to the BPR.

“Komunal introduces a new concept, namely “neo-rural bank” to develop small banks with sophisticated capabilities. We hope that this step can accelerate massive and deep financial inclusion for all regions in Indonesia," he concluded.

BPR Digitization

The DepositoBPR solution is a revolutionary step in digitizing BPR. In addition to Communal, there is ALAMI which acquired BPR Syariah which has now been rebranded under the name Hijra. The ambition is the same, ALAMI wants to digitize BPR to a higher level.

At the commercial banking level, Bank Permata is collaborating with the Association of Indonesian Rural Banks (Perbarindo) DKI Jaya to present API technology to serve BPR customers online. The banking activities provided include fund transfers, bill payment, top up, inquiry, reconciliation, and others.

Industrially, OJK has encouraged BPRs to collaborate by arranging collaborations with various parties, for example cooperation channeling between BPR and fintech startups.

OJK has given the green light for BPRs and in cooperating through two schemes, namely: channeling and referral. This is stated in the BPR and Fintech Lending Cooperation Guidebook which was published in March 2021.

Furthermore, by initiating the development BPR e-Cash in collaboration with Finnet Indonesia. BPR e-Cash is a kind of mobile-based electronic money that can later be used for various transactions such as QR payments, top up credit, send money, and others.