Nickel and USAID Launch "Finclusion", a Special Financing Program for Women's SMEs

Developer startup embedded finance for loans, Nickel (previously named Impact Credit Solution) and the US Agency for International Development (USAID) announced Finclusion, a financing program to support women-owned SMEs (WSMEs) in Indonesia.

Finclusion is a program worth $1,2 million (around Rp. 18,8 billion) to distribute $50 million (around Rp. 781,6 billion) in loans to women entrepreneurs. In the initial stage, Finclusion will be implemented over the next two years with the following focus:

• Targeting 180 thousand women-owned SMEs.
• Facilitate access to business loans for 4.000 female SMEs from local banks and/or other banks.
• Obtain a commitment from local banks and/or other funding sources to allocate a loan of $50 million for W-SMEs.

Nickel CEO Reinier Musters revealed that he had conducted in-depth research for one year to understand the needs of female business actors, both regarding financial management, access to capital, marketing strategies.

"We are trying to formulate how this program can be targeted according to their needs, so we know what the challenges are," he said at the recent launch of Finclusion.

From the results of her research, Nikel explained other challenges that are often faced by female entrepreneurs. For example, regarding managing business and household results. They found that home business owners often did not record sales and expenses, and sometimes their usage was combined with household needs.

From the loan provider side, he found that many financial institutions, especially banks, did not have a strategy to enter the SME sector or overcome the specific challenges faced by SMEs-W.

Musters also highlighted the reasons why the program has not been able to take aim unbanked, or segments that do not yet have access to formal financial services. Primarily, this segment does not have a bank account and relies on cash to carry out transactions. This makes it difficult for Finclusion to perform assessmentt.

"We don't have the data. [This also has the potential] to increase the cost structure even more when it comes to disbursement and repayment because they are used to manual methods, especially in rural areas. We are considering other methods. If there are any provider other--usually digital platforms have the ability to track this--this could be proxy we."

Virtual assistant "Mrs. Mira"

At the launch event in Jakarta (16/1), Nickel also introduced it chatbot WhatsApp "Mrs. Mira" which will be a virtual companion for implementing Finclusion, for example in accessing financial literacy modules and applying for loans.

Nickel did live demo Mrs. Mira's ability in the loan application process. It was explained that business actors would be asked to attach a number of documents, such as Bank statement. The verification will be processed in the partner's system Actioncalendar Nickel, whose approval was conveyed again via WhatsApp.

It should be noted, not only access to loan applications, Bu Mira has features live agent to track loan payments and payment reminders. Meanwhile, the interest rate and loan tenor are determined by ClickA2C as a partner Actioncalendar Nickel.

"We do not store borrower data and information sent to KlikA2C because we do not have permission from the OJK to do so. Approval is still carried out by KlikA2C. Likewise regarding mitigation standards if borrowers are late or fail to pay. However, we ensure that we will implement SOPs which is appropriate for loan collection," explained Musters.

Potency embedded finance for financial inclusion

For your information, Impact Credit Solution does rebranding became a Nickel last year was over acquired by Felgo Capital Pte Ltd. So far Nickel offers a solution embedded finance for loans, such as Nickel Lend and Nickel Fund.

Services embedded finance is developing in Indonesia in line with increasing adoption of digital services, especially financial services. This solution allows business owners or companies (B2B) to have financial services without needing to build from scratch and apply for a license

Some players in this market are DigiAsia Bios and Finfra. Finfra is part of Dana Bijak, an online loan provider. Meanwhile, DigiAsia has four financial service licenses, which are also API-based, so they can be connected to enterprises as needed

Based on reports AC Ventures and Boston Consulting Group (BCG) regarding Indonesian fintech, embedded finance has the potential to become game changer next in the regional financial industry. Especially in Indonesia, BI's policies on BI FAST and SNAP are an important impetus for development embedded finance.

For the banking industry, this makes it easier for them to reduce the opening of new branch offices, and encourage collaboration with third parties to open wider financial access to the public.