Tracking the Progress of Our FinTech Challenge Fund Winners

Deloitte representatives engaging with the challenge fund winners during a mentoring session

Towards the close of last year and as part of the Banking on Fintech project of Pulse Lab Jakarta, six Indonesian fintech companies were awarded financial grants. The grants were bestowed as part of the Microenterprise Fintech Innovation Challenge Fund which Pulse Lab Jakarta is implementing together with United Nations Capital Development Fund — Shaping Inclusive Finance Transformations (UNCDF SHIFT) programme, which laid out a challenge for companies to develop innovative ideas on how to get local micro enterprises digitally included. In January, the six winners started preparations to pilot their ideas under the mentorship of several industry experts. As they near the end of the 6-month piloting phase, we decided to check in with them to find out about their progress. Here’s what we learnt from the discussions.

The challenge fund provides financial grants to incentivise the adoption and use of digital business solutions for micro enterprises operating in Indonesia. As micro enterprises account for about 99 per cent of MSMEs (micro, small and medium enterprises) in Indonesia, they contribute largely to the country’s economy but are also vulnerable to economic shocks. Basing their ideas on insights from our Banking on Fintech: Financial Inclusion for Micro Enterprises in Indonesia research, the six winners (Amartha, Awantunai, Duithape, Gandengtangan, JULO and Modalku) explored a range of ideas which were then refined to help shape their prototype designs.

To promote their products and services, some of the fintech companies employed human intermediaries to better serve micro enterprises. With the support of the challenge fund, Modalku for instance began to explore an agent-based acquisition model. They started to recruit and train two types of agent in particular to help with acquiring micro merchants: sales agents and surveyor agents. Recruiting and retaining agents based on this acquisition model however presented a challenge. A high turnover of both sales agents and surveyor agents was observed in the piloting phase, and has encouraged them to come up with a more effective incentive scheme to not only attract but also retain such agents. Despite this challenge, the agent-based model has been able to increase growth every month.

Some companies have relied on distributors to bring in new micro merchants, considering that they already have hundreds of micro merchants within their distribution circuits as existing customers. Awantunai initially recruited sales agents to help persuade more micro merchant to sign up for its services, but scaling up its business model based on this approach has not been easy. Therefore, Awantunai is now transferring the roles of acquisition and retention to trusted distributors to further promote the adoption and use of its products among micro merchants.

While distributors had already been integrated in Gandengtangan’s business model, the company saw merits in transforming the role of its distributors. Instead of collecting cash payments, they chose to use the grant they received to explore a digital credit system. Based on early user research conducted, Gandengtangan discovered that traditional distributors favoured an information dashboard that can be accessed through mobile phones. Distributors indicated that using mobile phones is more convenient than having to pull out a laptop to process each transaction. As a result, the company began developing a tool practical for mobile phones to serve such purpose.

Amartha has recognised that financial literacy and digital literacy are important for their borrowers. Focusing on women micro entrepreneurs as their primary target group, they have designed an interactive financial literacy training model that borrowers can complete in about 15 minutes. To address digital literacy, Amartha began providing training for younger individuals who in turn are expected to guide older microentrepreneurs on how to make use of modern technologies for loan repayment and for accessing other digital banking products and services.

Duithape is in the early phase of developing a digital payment system for distributors to collect payments from microenterprises (such as eateries and small shops) without having to physically collect and transport cash. Nonetheless, the company’s survey among its microenterprise customers indicates that many are hesitant to convert to digital payments. Duithape is thus gathering ideas on how to assure its customers about the safety and efficiency of digital payments. Similar to Duithape, Gandengtangan is also testing prototypes that they’ve designed to promote cash light practices, for instance by disbursing loans to micro merchants in the form of a credit limit (instead of cash) that suppliers and distributors accept.

JULO utilised the grant it received from the challenge fund to launch a loan product, specifically designed for women micro entrepreneurs, using its existing application and a data-driven credit scoring algorithm. Despite receiving several loan applications from micro entrepreneurs, in the past JULO did not consider lending to this market out of concern for applicants’ non-fixed income. JULO is testing the effectiveness of its alternative credit scoring within this market segment in order to better tailor its products and meet the needs of micro enterprises. In particular, the company has been reaching out to micro entrepreneurs who previously submitted unsuccessful loan applications in an effort to accelerate financial inclusion across this market segment. Roughly half of the women micro entrepreneurs who were successfully approved for this new loan product previously had their applications denied because of their source of income and occupation.

As part of the challenge fund, the winners have been engaging in a series of mentoring sessions with several industry experts. In addition to the knowledge sharing session Visa conducted with the initial batch of shortlisted candidates, Oracle and Deloitte Consulting have also organised workshops to provide technical and strategic guidance on the development of the winners’ prototypes. Oracle led a mentoring session on cloud system architecture to help the fintech companies explore possibilities for optimising cloud system use for better sustainability. Deloitte Consulting also spearheaded mentoring sessions with each winner, tailoring the discussions to the unique needs and goals of the particular fintech company. The sessions included consultation on operational issues such as tax, legal, finance and strategic management. The sessions are expected to last throughout the piloting phase. We are also grateful to the Indonesian Fintech Association (AFTECH) and Indonesia Financial Services Authority (OJK) for their continuous support.

We are excited to see what’s ahead in these six companies’ journey, as they continue to explore innovative ideas to increase Indonesian micro enterprises’ access to financial products and services. We will be back with lessons learned later in the year, stay tuned.


Pulse Lab Jakarta and the UNCDF SHIFT are grateful for the generous support from the Government of Australia.

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Harnessing data for development, translating insights for social innovation

Pulse Lab Jakarta

Harnessing data for development, translating insights for social innovation