Anita Bernardus
IPMI International Business School
Amelia Naim Indrajaya
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Created a platform and market place of lending and borrowing for micro business facilitated with transparency and information disclosure. Giving borrowers, in rural areas with limited access can get funding capital easier in a better rate. Giving financiers a more profitable investment alternative with slightly higher than market price profit and opening a wider source of funding.
Created a machine learning system of credit scoring for the borrowers, who are from the non-bank communities. The credit scoring is to measure their ability to pay and willingness to pay, instead of credit risk analysis. The system also provides a psychological and behavior test for the borrowers.
The above system provides a real time result of credit scoring, from the previous manual analysis of two weeks. This scale up and enable to service an increase number of borrowers.
1. Advanced credit score technology: modernizing the selection process of borrowers with a credit score algorithm that is able to assess their feasibility comprehensively by combining behavioral, profile, and personality analysis in real time, from the previous two weeks. Also, previously, the credit scoring analysis is only available for bankable society and for the non-bankable, the test was manually given with a set of questions without any analytics.
3. Giving women the opportunity to improve their overall welfare, helping their husbands or households by starting small business from their houses, ie: food stalls, craft making etc and generally resulting in reducing poverty and gender inequalities.
Taufan went on to other palm oil sites and through his many more discussion found a similar problem; to create impact, they needed to open their own small businesses. So he decided to leave IBM and started Amartha.
Around 70% of the market in Indonesia is not bankable or around 95% of entrepreneurs are also not bankable; hence the market for the business is largely untapped. At the same time,
In 2015, Taufan decided it was time to create a platform to scale up the lending and borrowing business, going from offline to online. Services in micro business loans from banks are limited, hence Taufan thought he needed a larger source of funding, outside of the banking institutions.
"Giving women access to working capital, will alleviate poverty and give a greater success for the welfare of the company." added Andi Taufan.
Another big impact is for the lenders, who can now enjoy an alternative way of investment that is also equally secure to the old fashioned banking system. Amartha has obtained approval from Indonesia's regulatory board (OJK) and partnered with insurance agencies to ensure security for investors. Online financiers can also enjoy a simpler and easier way to invest and is provided with a live dashboard to monitor their funding activities at any time.
Another unique character of Amartha is that it is not all digital. 50% of the business process is done manually. Amartha employs over 300 people in the villages, providing weekly monitoring and mentoring, being the main point of contacts, attract borrowers and credit scoring organizer. With the expansion plan to Kalimantan, the business will create more jobs.
The business model for Amartha is getting 5% fee out the 20% interest given from the borrowers, and 15% to the lenders. Given the large market in Indonesia, the company has enjoyed profits with potential growth. It has also garnered attention from medias, government and other related stakeholders.
Amartha currently serves close to 10,000 lenders.
The potential of the business also has attracted top talents; mostly younger executives previously working for top global IT and consultancy companies; giving the company a strong team to sustain its innovation.
After participating in Amartha, these women can transform their profile into a bankable borrower, which gives them the opportunity to grow their business and soon become an investor or online financier themselves and helping other women in need and society in general.
The innovation gives the opportunity to serve the high number of non-bank community in rural areas to improve their economy and increase the overall nation welfare. Also, giving the opportunity for investors to enjoy an alternative instrument of investment with higher profit with the opportunity to give back to the society.
According to a survey made by Amartha, in the two years the borrowers started the program with them, the number of borrowers above the poverty line has increased from 6% to 47%. With borrowers making over IDR 5.000.000 per month increase from 16% to 34%, fro 2015 to 1017.
The program so far has served over 103,000 borrowers, giving more than IDR 416 billion with almost zero non performing loans.
"When you empower a woman, you empower a nation.' Kofi Anan.
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Fadilla Touizqua Zain, VP of Growth
Established in 2010, Amartha is a pioneer in fintech peer-to-peer (P2P) lending. Amartha gives the opportunity connect women in rural micro-enterprise with online financiers. Through lending, getting profitable return, and adding social impact. Modernizing microfinance for the people within informal economy sector and at the bottom of the pyramid, using the proven program of Grameen Bank, serving the same women target with a wider source of fund using the group financing system or “Tanggung Renteng (joint liability)” based loans.