Xendit Exposes Business Expansion Beyond Payment Gateways

Business diversification is a 'gasoline' for companies to continue to boost revenue so that it can be sustainable. Xendit started to expand its business beyond the payment gateway, by investing in Sampoerna Friends Bank and released the Nex digital bank app, as one of its efforts since last year.

In an exclusive interview with DailySocial.id, Xendit Co-Founder and COO Tessa Wijaya explained the company's background in taking these two strategic actions. He is optimistic about the development of financial products in Indonesia, especially regarding BPRs, which have so far seemed to be isolated from the hustle and bustle of digitalization. In fact, their role is no less important for the country's economy.

"They [BPR] have Opportunity which is very large, has many customers, but not many other startups have mentioned and focused on collaborating and developing their digital products so that they are even more established," he said.

Tessa added, amidst the hustle and bustle of digital banks, the majority of existing players are talking about end consumers (B2C). However, many forget that businesses (companies) also need a bank, not only for payments. "That's why we invested in Bank Sahabat Sampoerna, the Nex application, for that reason."

For the record, the Nex application has been released since November 7, 2022 after going through an internal testing phase. This application is 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 for business people. Existing (merchantt) Xendit.

"We want to facilitate merchants us with banking solutions that end-to-end with Xendit. The hope is that when the BPR business increases, both from savings and distributed loans, everything can grow with Xendit. So positioning Nex remains B2B," he explained.

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 BPRs more attractive shiny. In this way, the function of BPR to advance the region and improve people's welfare will be even greater.

Sampoerna Friends Bank

Tessa continued, the initial story of the business collaboration between Xendit and Bank Sahabat Sampoerna (BSS) had started even when the company was still small. At that time, his party really appreciated the openness of the bank in collaborating with startups to enter the digital realm and mix products together.

"BSS has been very progressive since it was always open because it makes sense for us to invest in them. With this investment there will be more synergies that can be done," Tessa explained.

One example that has been done by the two companies is in terms of remittance product alignment. Through a solution developed with BSS, it now allows remittance companies with a high level of compliance, to be able to automatically detect the identity of the sender of the source of funds and the account owner in the application, must be the same.

"That's one example of how we can serving partner that highly compliance like that. So from a capability standpoint, there are many who can't do that yet. But in BSS it can already," added Xendit Group Director Mikiko Steven.

Regarding the plan to become the majority holder, according to Tessa, of course there is such a discourse, but not in the near future. All companies engaged in the payment business must have the desire to provide products that are bank-alike. In fact, when Xendit was still a minority, BSS was even more open to brewing joint products. From Xendit's side, it helps banks from that side backend for e-KYC needs to be more efficient, there is no manual process anymore.

Quoting from the BSS site, Xendit Pte. Ltd. now controls a 24,2% stake in BSS. The majority holder is still narrowly controlled by PT Sampoerna Investama. Previously, in April 2022, Xendit's ownership was at 14,96%.

Both BSS and BPR Xen will become Xendit's vehicle to increase its non-payment business in targeting consumers merchant-his. Xendit will help the businesses of the merchant who need a business loan through referral and data history support to make the process even more streamlined. Not only that, previously the company also acquired financing company PT Globalindo Multi Finance last year, through PT Indo Digital Raya (15,13%) as of 2021.

"We see that B2B and B2C are very different in how to approach consumers, how to make products, and so on. Our DNA is B2B very. So if we make B2C products, we don't necessarily know what consumers want. From a technical point of view, we understand what product to make and how support businesses increase revenue and transact digitally. So very different angleher," concluded Tessa.