The general public is always concerned that technology — especially emerging ones like automation or AI — will negatively impact our lives. Indian entrepreneur Akshay Garg, however, believes that it is “our responsibility to use those gifts of the modern era to make tens of millions of lives better”. This is why he co-founded FinAccel, a Singapore-based fintech company that aims to build fast, affordable and accessible financial products for the underbanked in Southeast Asia.
The key to achieving that goal lies in Kredivo, its digital credit platform that mainly serves retail customers in Indonesia for now. Garg, also FinAccel’s chairman and group CEO, explains that the company primarily focuses on Indonesia as it is the region’s biggest market and ranks poorly for financial inclusivity.
“Despite being the fourth most populous country with a US$1 trillion ($1.38 trillion) GDP, an expanding middle class and a large proportion of smartphone users, access to credit is a huge problem in Indonesia. Credit bureau coverage tops out at 40% of the population, and the majority of the coverage is thin file [in which the consumer has little to no credit history, making it difficult for them to borrow money or apply for credit cards],” says Garg.
“We saw a huge opportunity to build the region’s first automated retail credit platform using a variety of data — from first-party and third-party sources — which solves for approval speed, affordability and accessibility. Through Kredivo, we deliver mobile-first financial services that offer tremendous value to customers and merchant partners by providing instant credit access and bringing millions into the fold of unsecured credit for the first time in their lives.”
Democratising financial services
Kredivo provides instant credit financing to customers for e-commerce and offline purchases and cash loans based on real-time decision-making. Garg shares that it takes only two minutes for Kredivo to approve a loan of up to IDR30 million ($2,641).
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Kredivo users can also use its buy-now-and-pay-later (BNPL) service, which offers one of the lowest interest rates among digital credit providers in Indonesia. Kredivo currently provides a zero-interest BNPL service for the first three months. Users seeking loans can tap on Kredivo’s six or 12 months instalment plans at an interest rate of 2.6% per month.
Given the ease of use, Kredivo has approved over six million customers since it started operating in 2016. It also saw exponential growth during the Covid-19 pandemic, wherein its total user base and annual revenue doubled between 2020 and last year, making FinAccel operationally profitable since the middle of last year.
“With presence across eight of the top 10 e-commerce merchants in Indonesia and open loop integrations that give our customers access to the Mastercard network globally, Kredivo has the largest market share across most of the major Indonesian e-commerce merchants. Customers also love using Kredivo. The average Kredivo user transacts more than 20 times a year,” claims Garg.
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FinAccel is backed by some of the leading investors in the region, including Victory Park Capital Advisors, Mirae Asset, Naver Corp, Square Peg, Jungle Ventures, Telkom Indonesia, Singtel and GMO. This success, he adds, took a lot of work as financial inclusion is a complex problem that encompasses regulatory (licensing and compliance), funding (lending capital), credit risk management, data aggregation and demand generation. “But we have solved those challenges systematically. It is critical to have the right team and an agile mindset to adapt to changing times. You cannot overstate the importance of luck as well.”
FinAccel has since moved to expand regionally and broaden Kredivo’s service offerings. As Garg says: “Kredivo can scale its proprietary risk model in other similarly credit-deficient regional markets. With a deep regulatory moat with licenses in these expansion markets, Kredivo expanded to Vietnam last August and will look to other markets in the future.”
The company also acquired a majority stake in Indonesia Stock Exchange-listed Bank Bisnis Internasional, with plans to launch a neobank shortly. “Today, you think about Kredivo for e-commerce, personal loans and very soon for offline purchases. But later, we want you to think about Kredivo for motorcycle loans, car loans and credit cards as well,” says Garg in a separate interview with Forbes in February this year.
To realise its vision of becoming a deeply admired financial services company that impacts and enhances the lives of people in the region, FinAccel announced in May its commitment to the EDISON Alliance’s 1 Billion Lives Challenge. It pledges to provide access to digital financial services to up to 20 million people in Indonesia, Vietnam, Thailand and the Philippines over the next five years.
Becoming a successful entrepreneur
FinAccel is not Garg’s first foray into entrepreneurship. The winner of this year’s EY Entrepreneur of the Year for Financial Technology, he co-founded India-based advertising technology company Komli Media in 2006. However, Malaysian telecommunication giant Axiata Group acquired Komli Media’s Southeast Asian operations for US$11.25 million in 2015. Komli Media sold its Indian operations to the digital media network company SVG Media that same year.
“Komli Media pioneered real-time bidding and audience profiling in Asia using big data. This inspired me to use similar technologies to solve a different problem: the lack of credit access among retail customers in Indonesia, [which is why I co-founded FinAccel]. I enjoy being an entrepreneur as it allows me to combine my twin passions of building winning products and winning teams,” Garg says.
When asked for advice on becoming a successful entrepreneur, he says there is “no single recipe for success”.
Entrepreneurship is a journey with many highs and lows, so it helps to have a level head through the highs and the lows. For venture capital-backed entrepreneurs, it’s important to understand your unit economics and lifetime value (LTV) — the time for growth at any cost is over.
Akshay Garg, co-founder, chairman and group CEO, FinAccel
He also highlights the importance of having the right organisational culture, especially in this era of uncertainty and disruption.
“I don’t have a perfect playbook and am still learning and improving on this leadership journey. However, clear and proactive communication around our decision-making approach has worked well for us. FinAccel’s culture is one of a high degree of trust and teamwork. Without this strong cultural core, it is hard for me to imagine that any leadership style would succeed in these turbulent times.”
Commenting on the EY award, Garg says: “I am deeply humbled and grateful for the recognition. This award isn’t for me, but it’s a recognition of my immensely talented and motivated team at Kredivo and other group companies that has worked tirelessly to pioneer a new industry (like digital data-based credit scoring) and a new business model (like BNPL) in this region, and accelerate the delivery of credit to underserved and underbanked populations firstly in Indonesia and now in Southeast Asia.”
