Reynold Wijaya of Modalku: We Only Take the Crumble of the Pie Crust That Banks Never Eat

JAKARTA (TheInsiderStories) – Founder and CEO of an Indonesia-based peer-to-peer lending fintech startup Modalku, Reynold Wijaya, expressed his optimism about the industry’s potentials.

For him personally, Fintech industry is an advanced development of the financial services industry, which majorly depends on the internet and digital innovations.

Realizing that technology is the future of the finance industry, Reynold and his business partner Kelvin Teo decided to become part of the revolution.

Modalku is a platform that connects borrowers who need working capital with lenders who have extra money and want to get interesting yields.  For both of them, it is no longer about personal gain, but helping others.

He is confident about the industry’s prospects on the back of the country’s low financial service penetration. Through the services offered by the Fintech players, people in any parts of the nation can enjoy access to the financial services. He said the sector is expected to serve as the ‘double growth factor’, where the tech industry grows alongside financial services industry.

The Insider Stories interviewed Wijaya to explore about his visions and missions in the industry.

Q: How do you define fintech? What makes Modalku different from other fintech company?

A: Fintech is like many other technology products, with focus just into the financial services. It can help people to manage their finance better and give them access that was previously difficult. It is also cheaper and faster. For example with technology on payment system  everything can become cashless and faster.

Modalku was established with the sole purpose of scaling up non-bankable Indonesians by pooling investors to become lenders for borrowers SME loans. We aim to help create bankable credit histories for borrowers.

This service is an alternative option for investment that is based on digital technology with aims to address what SMEs need, like fast working capital loans with competitive interest rates.

Q: How did you come up with this idea, that this business is important for Indonesia?

A: Actually, it’s long story. But let’s start with I once went to school at U.S, and meet my colleague, who become my business partner in here, and we started to think how we can do something in Indonesia that can combine technology and business. We see technology the future.

We feel like we have to jump into the Fintech industry because it can create big impacts. We feel like Indonesia is facing financing gap because financial access in here is very expensive. This country can actually achieve more than what we have if we have better support system. For that reason, due to the big market potential, we decided to create P2P business.

Q: Apart from your social mission, how do you make profits from this business and what is your strategy to make this business more sustainable?

A: Of course, we have to have a sustainable business. But again, if we can do good things while doing it, then it will be better. Honestly, banks and financial institutions in Indonesia are doing quiet good jobs. Right now we are not really concerned about business volume; we care about scaling the business properly. Today, we want to focus on smartphones so the process [of giving services to customers] can be faster. We want to convert conventional users to smartphones.

Q: What’s your business focus in medium term?

A: We are always concerned about productivity. We offer consumer loan products to SMEs, because we think this is more meaningful to help Indonesians to get access to funding. We are targeting to become the best and the biggest SME lender. We never disrupt the banking industry’s business. We can’t offer loans to corporations, we only take the crumble of the pie that bank never eat, or those who are unbankable. We are the alternative of banks.

We have channeled Rp 800 billion (US$57 million) of loans last year. We also have been officially registered on Indonesia’s Financial Services Authority (FSA) and has a custodian agreement with Bank Sinarmas, making Modalku the first peer-to-peer lending platform whose funds are guarded by a custodian.

Q: What would be the biggest indicator to you that you are doing the right thing?

A: The biggest indicator to do a startup is when there is a major underserved need that technology can help solve. For example, the SME financing gap in Southeast Asia is US$120 billion large per annum. Technology (along with other ingredients) can solve for that and help SMEs succeed.

Q: Is there anyone/anything who inspired you to manage the company the way you do, and to define the culture Modalku has?

A: Working on the dynamic business that is Modalku today, it is no longer a single person nor one single ‘aha’ moment that makes me or my team better. To solve the myriad of challenges that we have faced to date, we have benefitted from valuable input from our advisors, investors, industry contacts, friends and team as well as learning from lessons in the field, whether positive or negative. Running a company is a constant journey, and we try to make the best of what we have.