Xendit Expands Banking, Establishes Xen Rural Bank [UPDATED]

The expansion of the unicorn startup business in the fintech sector, Xendit, has now gone beyond business payment gateway by venturing into banking and establishing PT Bank Perkreditan Rakyat Xen. From monitoring DailySocial.id, BPR Xen began to actively open job vacancies on various job search portals.

Not much information can be obtained regarding this, including whether Xendit enter through an existing BPR acquisition scheme or build from scratch. The location of BPR Xen is in Depok, West Java. According to the official statement submitted by Xendit's management to DailySocial.id, it is claimed that PT BPR Xen and PT Sinar Digital Ter Depan (Xendit) are two separate entities and are not affiliated in ownership.

"Xendit, a financial technology company that provides payment solutions and digital infrastructure, has just entered into a strategic partnership with PT BPR Xen, a Rural Bank located in Depok, West Java. In the early stages of this partnership, both parties will work together to explore how This partnership can have a good impact on Indonesia's economic growth, especially for Small and Medium Enterprises (SMEs)," wrote Xendit's management.

They continued, "Because it is still in the exploration stage, for now we don't have any information regarding the strategy and also the products to be developed. We will inform you if there are further developments."

The presence of BPR Xen carried by Xendit enlivens digital players who use BPR and BPRS as their vehicles in the banking industry. There is UpBanx (Fazz Financial Group), Hijra Bank (ALAMI Group), and Communal which carries the DepositoBPR product.

Compared to commercial banks, BPR's business activities are much narrower because they can only channel credit (no credit cards are allowed and the credit limit is generally limited to billions of Rupiah), savings, and time deposits. The scope of its customers is also more limited, only at the provincial level.

However, this segment actually needs digitization the most so that they can compete in the industry, plus ecosystem support. Xendit as payment gateway have the ability to handle the flow of transactions in and out of money from various sources of funds to reconciliation.

BPR Digitization

Communal with its DepositoBPR product, takes a perspective from the side of BPR depositors, which is still limited because it has not been digitized, so that its products are unknown and cannot be accessed by urban depositors. DepositoBPR bridges BPR partners who are looking for customers to open deposit accounts with depositors who want to develop funds or invest through BPR Deposits.

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

In developing BPR Deposits, one of the main challenges is standardizing and optimizing BPR processes which are currently still fragmented, so improvements are needed to improve depositor experience. For example, changing wet signatures to digital, e-KYC via video call, and most importantly converting physical bilyets into e-bilyets.

Interestingly, in providing this solution, Communal cooperates with the digital ecosystem. One of them is Xendit to facilitate the flow of transactions.

Industrially, OJK has encouraged BPRs to collaborate by arranging collaborations with various parties, for example channeling cooperation between BPRs and fintech startups. OJK has given the green light for BPR and fintech lending to cooperate 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 of 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.

*) We added the official statement submitted by Xendit's management