Indonesian fintech startup Komunal raises $2.1m from East Ventures, Skystar Capital

Komunal, Indonesia’s first fintech company to offer Neo-rural bank services locally, announced that it has raised $2.1 million in its Series A funding round led by existing investors East Ventures and participated by Skystar Capital.

The startup provides an ecosystem for BPRs (rural banks) across the archipelago to source third-party funding and syndicate lending through its platform.

Komunal said it will use the fresh investment to enhance its latest product, DepositoBPR, which is regulated under an official license from the country’s Financial Services Authority (OJK).

Indonesia has 1,500 BPRs across the archipelago. Although these BPRs are only allowed to channel credit in their respective provinces, they are allowed to source deposits nationwide – guaranteed by the government at ceiling rates of 2.5% higher than those of commercial banks.

Yet Komunal said these 1,500 BPRs combined only account for 1.5% market share of the country’s total depositors as most of these BPRs are located in suburban areas and not equipped with digital channels – making their product inaccessible to urban depositors.

DepositoBPR enables societies nationwide to access the highest possible government-guaranteed deposit rates from rural banks in any region without having to visit the bank, according to the announcement.

“We believe a strong partnership between funding agent and rural banks will boost the country’s financial inclusion tremendously. As BPRs have relatively smaller assets than commercial banks, they have dynamic changes between lending and funding needs,” said Hendry Lieviant, Co-Founder of Komunal.

During the pandemic, Lieviant said the irony was even clearer as commercial banks are overflowing with liquidity despite offering record low rates while many BPR had difficulty sourcing deposits just because 95% of the country’s depositors reside in urban areas.

“We hope this platform can bridge the gap,” Lieviant added.

To date, Komunal said it has engaged with 60 BPRs across Java and Bali and launched the beta version of DepositoBPR services in August 2021. The company focuses on doubling the BPR market share by offering a higher rate, as well as more seamless transactions to new and existing clients.