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FinAccel's Garg: "Credit data is a challenge for BNPL in Indonesia"

Akshay Garg, CEO and founder of FinAccel that operates the credit finance platform Kredivo, shared challenges and strategic perspectives of credit-based payments and buy now, pay later industry in Indonesia

April 14, 2021 | Neeti Aggarwal

In Indonesia, more than half of the adult population remains unbanked and lack access to financing. The consumers’ short-term credit needs have increased amid the financial uncertainties. Consumer expectations and needs have evolved, the smartphone and internet penetration increased while the digital payments and online shopping volumes surged especially during the pandemic. These have accelerated the growth momentum of credit-based payments propositions such as buy now, pay later (BNPL) in the country.

Indonesia is characterised by low credit card penetration and high e-commerce growth, presenting unique opportunities for innovative digital lending models. According to JP Morgan’s 2020 e-commerce report, the country has a credit card per capita penetration of 0.06% while the smartphone penetration is 28% and the e-commerce is valued at $19 billion. It forecasts Indonesia’s business to consumer e-commerce to grow at a compound annual growth rate (CAGR) of 14.8% from 2019 to 2023. Meanwhile, the credit cards as well as the cards transaction value further dropped in the country in 2020, according to the Indonesia Credit Card Association.

“Less than 10% of the eligible population in Indonesia has access to credit cards. We target to primarily solve this problem of access to credit in the country,” said Akshay Garg, CEO and founder of FinAccel. The company offers digital credit card equivalent BNPL and loans through its platform Kredivo.

Addressing key challenges in credit finance

Fintech companies are nimble in developing stronger data insight capabilities that allow them to target new customer segments. In the lending business, the risk assessment ability can become a key differentiator but in emerging economies like Indonesia, the lack of customer credit data poses unique challenges.

“In Indonesia, credit bureau penetration is about 20%-25%. More than half the time you can’t even get any data o...

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Keywords:Credit Data, Credit Finance, BNPL, Digital Lending, E-Commerce