BRI Agro ties up with Payfazz

BRI Agro, a subsidiary of Bank Rakyat Indonesia (Bank BRI), has inked a deal with prominent local fintech startup Payfazz, resulting in BRI Agro’s digital savings and micro-lending solutions being integrated into the Payfazz platform.

Bank Rakyat Indonesia Agroniaga Tbk (BRI Agro) has inked a deal with local agent-based fintech company Payfazz. Using the API (application programming interface) of its signature digital lending app Pinang, BRI Agro’s digital savings and lending solutions will be channeled to 250,000-plus Payfazz agents as end-users. In turn, agents will also be able to relay the same offerings to their collective 10 million monthly active customers across rural Indonesia.

The partnership will accelerate BRI Agro’s plan to go beyond agriculture-focused lending and become Indonesia’s top digital bank. As a proper neobank, BRI Agro will serve as the nation’s official house of fintech and home of the local gig and services economy.

The deal will instantly see BRI Agro’s digital savings accounts become more ubiquitous to underserved Indonesians in rural areas. Payfazz agents will be able to offer Pinang’s low-interest rates to customers instantaneously, without needing to communicate with BRI Agro.

As the world’s largest archipelago, Indonesia's unique geography has historically made opening brick-and-mortar bank branches a cost-heavy undertaking for legacy lenders. As a result, while the majority of fintech brands and lenders cater to bustling cities and the Jakarta Metropolitan Area, rural Indonesians are largely left by the financial wayside.

BRI Agro CEO Kaspar Situmorang said Payfazz’s rural-first approach aligns with BRI Agro’s focus on bringing financial inclusion to the country’s hard-to-reach and informal economies, which account for Indonesia’s massive underbanked (47 million) and unbanked (92 million) populations.

“Gig and service economies gained a stronger foothold in rural Indonesia due to accelerated digital adoption caused by the Covid-19 pandemic, but many of these microentrepreneurs still lack access to basic banking services that can help them grow their businesses, mitigate risks, and build healthy credit profiles. With Payfazz acting as yet another channel for our digital savings and micro-lending solutions, BRI Agro takes a giant step closer to becoming the financial home for Indonesia’s gig economy. We are especially excited to bring Pinang -- with its flat 1.24% interest rate and two-minute loan approval process -- to over 10 million non-urban Indonesians via Payfazz" explained Situmorang.

While it’s popularity and potential are clear to see, Pinang is still in its infancy. At the end of 2020, the fledgling app’s loan disbursements totaled IDR70.6 billion (US$4.87 million) across 18,069 borrowers.

Going forward, Pinang’s API will allow BRI Agro's partners to integrate its services into their own apps for end customers to access. BRI Agro is currently developing Pinang for businesses in the retail space, with loan sizes ranging from Rp101 million (~USD7,000) to Rp1 billion (~USD70,000). Meanwhile, for micro borrowers, it offers loans ranging from Rp1 million (~USD70) to Rp100 million (~USD7,000).

Payfazz leverages its agents (most of whom are mom-and-pop store owners in remote villages) to serve as go-betweens for banks like BRI Agro. Small shops or ‘warungs’ (outdoor food, coffee, and snack stalls) are often high-traffic areas in Indonesia’s countryside, and their owners are well-known and trusted by locals. This in turn makes them the ideal marketers for BRI Agro’s digital banking products.

Users deposit cash with agents, who then transmit the amounts to BRI Agro savings accounts via the Payfazz app, use balances to pay utility bills, or apply for microloans via Pinang’s API.

Payfazz CEO and co-founder Hendra Kwik said, “We are glad to have BRI Agro as a partner in our shared quest for economic inclusion across Indonesia. Here at Payfazz, we see banks and other fintech outfits not as competitors, but as potential partners. We concentrate the vast majority of our resources in rural areas. This includes vetting and onboarding agents and understanding the nuances of different provinces.”

He added, “With this in mind, we can help BRI Agro channel its competitive savings and lending solutions to rural Indonesians quickly and securely. Down the road, we hope to expand this partnership to BRI Agro’s more complex products such as insurance and investments, then eventually toward formalizing these so-called informal economies.”

The tie-up with Payfazz is one of BRI Agro’s several partnerships with fintech brands -- a key strategy to widening the digital bank’s footprint via third parties. In 2020, BRI Agro’s fintech partnerships resulted in IDR215 billion (~US$14.8 million) worth of loans disbursed across third-party apps.