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Fintech Empowering Indonesia’s Fisheries Sector

Image credit: www.efishery.com

An Indonesia-based financial technology start-up (fintech lending) partners with a tech-based company in the fisheries sector to empower SMEs in the country.

The companies said that the collaborated service is neobank or digital banking with artificial intelligence (AI) based credit scoring engine, a fully digital underwriting process, access to funding, and a supply chain digitisation platform. The service allows SMEs to conduct supply chain transactions online while receiving specific recommendations for financing and banking products.

Fish breeders can focus on improving cultivation technology, while the fintech company’s solution will be utilised to accelerate their business from day one. The fintech start-up will strengthen the Kabayan or Kasih, Pay Later programme from its partner’s funding campaign. Kabayan is a programme to purchase aquaculture needs such as feeding equipment and fish feed, with a tenor system. In this case, the fintech start-up provides direct loan facilities to farmers through the Kabayan feature.

The tech-based fisheries company said that fish farmers have had difficulties in obtaining financing because business patterns are considered to provide uncertain risk. Whereas with the right approach, the fish farming business can be very profitable.

This is the first platform to integrate operational digitisation solutions with financing and banking products targeted for SMEs in emerging markets. SMEs can easily perform supply chain transactions online while receiving specific recommendations for financing and banking products seamlessly through the platform.

Through data and technology, the fisheries tech company can connect farmers with financial institutions and open access for fish cultivators to finance. This collaboration is expected to be able to provide support for cultivators to increase their cultivation business and in the end, the fisheries industry can be more productive through real financial inclusion.

According to the Directorate General of Fisheries and Aquaculture, the COVID-19 pandemic has negatively impacted the margins of fish and shrimp farmers by 20 to 30% due to lower retail prices and increased costs. This situation harms fish farmers who need more capital to buy fish feed while market consumption is decreasing.

The government, through an accelerated programme to increase aquaculture production and linkage fisheries, is trying to revitalise this industry. The tech-based fisheries company, with its aquaculture acumen, and the fintech start-up, with its supply chain digitisation and banking and financing solutions, have a unique role to play in supporting these government goals.

As reported by OpenGov Asia, people in Indonesia are turning to digital services during the COVID-19 pandemic, one of which is non-cash payments. Financial technology companies saw a 267% increase in the number of users.

Growth marketing experts of these companies said the number of users in Indonesia was more than 10 million per month during the fourth quarter of 2020. Companies recorded an increase in the number of users. According to them, there is a substantial addition of new users throughout 2020.

In total, the application for a specific fintech service is already used on 115 million devices. They believed that the number of users increased because people switched to digital services during the pandemic. They also recorded an increase in the number of partner merchants by 95% on an annual basis (year on year/YOY) last year.

As digital payment platforms, these fintech companies encourage MSME players to digitise, especially adopting digital payment methods. They said that their companies saw that there was a great potential for MSME players to enter the digital realm. These are also in line with the targets of the Ministry of Cooperatives and SMEs. The Ministry is targeting 30 million MSMEs to enter the digital market by 2023.

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