Launched in April 2016, digital credit card platform Kredivo has grown into one of the fastest-growing fintech companies in Indonesia. It has received multiple international recognitions, including being the only Southeast Asia consumer lending company to make the 2018 KPMG and H2 Ventures Global Top 100 Fintech Startups.
Kredivo was one of the pioneers in Indonesia’s e-commerce payments landscape with its “buy now, pay later” premise.
Kredivo enables online shoppers to apply for instant credit as they complete the purchase on their favorite site, which makes it possible to buy bigger-ticket items and pay back over time. Kredivo works with different platforms, and it arrived at the right time as limited access to credit is still a problem for many young people in the country.
“We are growing more than 10% month over month, nearly 40% per quarter in the past two years,” Akshay Garg, the co-founder and CEO of Kredivo told KrASIA in an interview.
Kredivo currently has around two million users and partners with over 200 merchants including the region’s major e-commerce platforms Tokopedia, Lazada, Shopee, and Bukalapak.
Garg said that Kredivo is now one of the top four payment methods on the biggest e-commerce sites, the most popular method being bank transfers, cash payments, and conventional credit cards.
A leading player in the field
According to a customer survey that was conducted by Kredivo in collaboration with International Data Corporation (IDC), 80% of Kredivo’s customers choose its digital credit card as number one payment method when they make purchases. And the average customer makes Kredivo transactions at least five times per month, Garg said.
Kredivo claims to have the lowest interest rate amongst all digital lenders in the country. It charges no interest for loans on a 30-day term and 2.95% for payment terms between three to 12 months with transactions from IDR 3 million to IDR 30 million, which is only slightly higher than credit card interest from banking institutions at 2.25%.
The “pay later” concept has been increasingly popular among fintech players in the past year as Gojek’s e-wallet platform GoPay, Ovo, and Traveloka also apply this strategy in order to create seamless transaction experience for their customers. However, Garg doesn’t really think of them as competitors.
“There are two ways in building a business; focus on customers, or react to competition. We chose the former,” said Garg.
“What we do is different from an either e-wallet or P2P lender platforms. I think e-wallets have been doing a great job in replacing cash but we focus more on giving users access to credit in a way that’s even more convenient than using a banking credit card. Meanwhile, most lenders may charge 5% interest fee per month which is much higher than we offer. We are the only low-cost pay later product in the market and honestly, I don’t think too much about the competition,” he continued.
Creating a convenient and safe product is Kredivo’s main focus and so far, Garg says the company has managed to set the non-performing loan (NPL) rate at 3.5% due to its strict AI-powered credit scoring and fraud detection process. “Our NPL rate is one of the lowest in the market and since you spoke about competition, I don’t think there are many fintech players with an NPL rate as low as ours.”
Acquisition and regional expansion plans
Kredivo is one of the top-funded fintech companies in Indonesia. The startup raised USD 30 million by Square Peg Capital in July 2018 and it raised an undisclosed amount of additional funding by MDI Ventures and Telkomsel Mitra Inovasi (TMI) earlier this year.
“As we’ve been developing deeper synergy with them, we are working on multiple projects. For example, we did a partnership with Telkomsel recently to help them target customers with low-cost instalment plans as Telkomsel wants to upgrade its users from 3G to adapt 4G network. We’re very excited with our partnership with TMI and MDI Ventures and open to more collaboration in the future.” Garg said.
Kredivo is also exploring possibilities to acquire a local multi-finance company in order to obtain a multi finance license. This would allow Kredivo to explore new credit products. It would also increase Kredivo’s loan distribution power as multi finance companies are allowed to distribute around 30% of its financing into lending.
“It is something that we are currently working on and we are considering either acquiring a multi finance company of applying for the license directly with OJK. As the business grows, we want to diversify our products in financial services and therefore need more relevant licenses,” Garg said.
“If you look at what we do, we actually operate like a multi finance company anyway and that license will give us certain advantages. For example, we can tap into the capital market, Indonesia stock exchange, for a bigger capital raising,” he added.
Kredivo is in the process to start its regional expansion, starting from the Philippines, according to Garg. He said the firm has acquired a license in the Philippines and is targeting to launch a product there early next year.
The Philippines will become Kredivo’s first foreign market because its economic character has similarities with Indonesia. Both countries have millions of adults who are underbanked and in need of financial services. Besides the Philippines, Kredivo does not rule out the possibility to expand to other countries in Southeast Asia in the next few years.
A solid team equals a solid business
Kredivo was born out of Garg’s passion for data and technology. Before Kredivo, he co-founded Komli Media, a real-time digital tech platform providing solutions for display, mobile, video, and data-related areas. The company was acquired by Axiata in 2015.
As a serial entrepreneur, Garg believes the key to building a successful business is to “build an amazing team and take really good care of them. Anything else will take care of itself.”
He applies the same principle to Kredivo and points out the stability of his team.
“We probably have the lowest attrition rate in the country. Did you know that the average attrition rate in Indonesian startups is between 15 to 20% per year? Young professionals today tend to change jobs constantly, I think it’s just the way the mindset is and it is okay. But here at Kredivo, our attrition rate is only 1.5% to 2%,” Garg said.
“Taking care of people doesn’t necessarily mean that you need to give them nice office or perks, but it’s about listening and understanding their passion and desire so we can grow together,” he added.
Kredivo is currently in its growth stage and with its consistent growth and good performance, Garg hopes that his company will reach profitability in 2021.
With many plans and upcoming projects, Garg said that Kredivo is open for potential fundraising although he doesn’t want to rush it. “Let’s see how it goes. We’re thinking about Series C and we’re getting lots of interest so we’ll go from there.” He concluded that additional fundraising is nothing immediate for now.
