Jezzie Setiawan, CEO and Co-founder of Gandeng Tangan, who was one of the keynote speakers during Fintech Festival (FINFEST) 2018, gave us a little insight on her company and the financial technology (fintech) industry. Gandeng Tangan is an online platform in the micro-finance marketplace that helps micro-businesses acquire additional capital from crowd-sourced investors. Keep reading to learn how it all began.
Can you tell us a little bit about how Gandeng Tangan started?
First, I created Gandeng Tangan because there’s a huge financing gap within micro-businesses in Indonesia. There are 59 micro-businesses in Indonesia and financing them totals to Rp600tn; however, the financing capacity is only Rp120tn. This means that the financing capacity can only cover 20 per cent of the financing needs, resulting in an 80 per cent financing gap. Consequently, the rest would only have a financing option from loan sharks who will charge them 30 to 40 per cent per month.
For that reason, as well as due to my background in banking, I’m aware that banking does not serve this kind of market. Micro-businesses tend to encounter difficulties when obtaining a bank loan; my co-founder, who created a small culinary business, had that difficulty. Thus, together we decided to create a lending platform specifically for micro-businesses.
Can you briefly explain how the system works in Gandeng Tangan?
The kiosk will receive the loan from us, but they won’t receive the money since we give the money to the distributors. Instead, the kiosks will acquire products such as onions, potatoes, and other groceries. The distributors will recommend the buyers to us, and then we will disperse the money to the distributors.
What are the main challenges of Gandeng Tangan?
Our current challenge is to find a good a borrower to maintain the quality of loans. This goes from managing risks to keeping non-performing loans (NPL) small—we want to manage the risk to be less than 1 or 2 per cent. We should disperse the loan wisely to manage the risks; however, we still want to grow as fast as we can because there’s a lot of competition in fintech. Though there are only a few fintech peer-to-peer (P2P) lending platforms that serve micro-businesses, we still want to compete and disperse bigger loans.
Another challenge is to grow and to disperse more loans while preventing very high NPLs. There are other platforms that disperse loans very quickly but that have high NPLs. The bad debt becomes very high, and we don’t want that.
How can Gandeng Tangan collaborate with other Fintech platforms?
I think we can collaborate with other crowd-funding platforms especially if our market segment serves different needs. For instance, Wecare serves health specifically and Gandeng Tangan offers business loans. Therefore, both serve different needs but have the same target segment.
How do you find new ideas to help your business grow and expand Gandeng Tangan?
Gandeng Tangan has lots of plans this year. We want to focus on getting more distributors, such as institutions. The distributors have the buyers that are basically the kiosks, stalls, and so on. Moreover, we would like to expand to traditional markets where we partner up with market managers and deal with the head of the market.
Therefore, the market officers will become our local agents in that traditional market. When there’s a problem with the borrowers, the market officers must have the responsibility to solve it together. In some cases when a bank officer offers loans to micro-businesses in the traditional market, they don’t involve the market officers. Thus, when a problem comes up, the market officers don’t care about the problems because they’re not responsible for the loan. But if we involve them, then they can also become our managers in the field.
While on the subject, do you have any requirements when you choose your distributors?
Currently, we have partnered up with grocery distributors that connect farmers directly to kiosks and stalls. The requirements that we seek from distributors are only their list of customers and their list of transactions from their respective customers. By assessing their historical transactions, we can decide whether we would like to partner with that particular distributor.
Customers (kiosks) need time to buy groceries from the distributor. Compared with having them purchase with a small amount of money, it would be more efficient if we lend money first, which would enable the customer to pay within a week or two; consequently, the system is beneficial for both parties.
How do you motivate your employees? What are the traits that you look for when you want to partner up with a business?
In order to motivate my employees, I always show them our goals, our vision, where Gandeng Tangan is changing, and the developments that we aspire to achieve. When they’re working, they should be familiar with what the goals are, and the thing that keeps them going is when they know that their contribution is valuable.
Sometimes when people work at big corporations, their work effort is not necessarily used. We have to make sure that his or her work is appreciated. It will be rewarding for them knowing that the work impacts society. Also, when we look for a potential employee or business partner, we have to make sure that they believe in our values and our system. While making sure that they have the skills that we need, the importance is also on them believing in our vision and goals.
What improvements would you like to see happening from the government regarding the fintech industry?
Particularly in fintech, OJK has supported it very well: it has created the Peraturan Otoritas Jasa Keuangan (POJK) and a directorate specifically for fintech. The government cares about this industry and acknowledges that it’s growing bigger; however, there is no union of voice and spirit within the government itself. Some government bodies would say to society to be wary of fintech because they don’t get any Deposit Insurance Agency, which alarms people and causes them to have misconceptions about fintech. When you borrow from a bank, you will be guaranteed by the Deposit Insurance Agency (LPS).
On the other hand, there’s a side of the government that supports the fintech industry. I think it would be better if all parts of the government see eye to eye to ensure the development of fintech in Indonesia, and to eventually become more advanced than other countries.
If you could have one superpower, what would it be and why?
I would like the ability to read minds. When we create a product, we have to conduct a research—it would be easier if we have the ability to read people’s minds. Better yet, after conducting the research, we get to know if the data results are corresponding with what the people were thinking. From this result, we can offer goods that they’re interested in.