Covering Disruptive Technology Powering Business in The Digital Age

Amartha, an Indonesian microlending platform founded in 2010, reaffirmed its commitment to creating an inclusive financial ecosystem in Southeast Asia. During a session in Bangkok during Money 20/20 Asia, Amartha’s CEO and Founder, Andi Taufan Garuda Putra, delved into the immense growth potential of Southeast Asia’s micro businesses, emphasising the importance of financially empowering micro businesses in unlocking the region’s growth and prosperity.

Southeast Asia is home to millions of micro-, small-, and medium-sized enterprises (MSMEs), constituting up to 40% of the region’s economy. Notably, microbusinesses represent up to 94% of MSMEs, playing a pivotal role as an economic engine, particularly in countries like Indonesia and Thailand.

Despite their significant contribution, 90% of micro merchants in Southeast Asia encounter barriers such as limited credit access, challenges in securing loans due to insufficient collateral and credit history, and low financial digital literacy, particularly in rural areas. Against this backdrop, FinTech players like Amartha, have been playing a key role in providing accessible services to underserved communities, with a larger proportion of microenterprises, compared to medium-sized ones, borrowing from FinTech lending services.

The drive towards financial inclusion also coincides with the rise of impact investments in the region. Southeast Asia—and, in particular, Indonesia—has become popular impact investment spot, allowing global investors and institutions to diversify their portfolios in growing markets while making a social impact.

From 2020 to 2022, impact investors committed more than 67% of the total capital that was invested in the entire 10-year period from 2007-2016 in Southeast Asia, showcasing the acceleration of impact investment activity in the region.

“The growth of Indonesia’s economy is not well-distributed geographically, especially outside Java. This disparity is yielding innovative solutions, such as the financial inclusion ecosystem. Amartha is showcasing the vast potential that businesses hold in addressing societal issues. We remain confident in the opportunities ahead, committed to bringing best-in-class technology that is relevant and user-friendly for traditional micro-merchants, enabling them to unleash their full potential,” said the Amartha CEO.

Integrating Key Services at Amartha 

Amartha builds a digital financial infrastructure that connects micro businesses in Tier 2 and 3 cities outside of Java, with embedded lending and funding models both institutional and retail, allowing borrowers to attain working capital in a streamlined manner. Amartha infrastructure also provides a payments service and its own credit scoring system, making it the most integrated microfinance platform for Indonesia’s grassroots communities.

Furthermore, Amartha has also employed branchless agents by empowering local merchants in rural areas, effectively providing them wider access to digital financial services like p2p transfer, micro savings, and bill payments. This strategic product brings essential financial services within close reach of micro-businesses. Thus, the company actively promotes digital and financial literacy by deploying its officers to rural villages communities.

Insights that were discussed at the session:

• Unlocking Southeast Asia’s Growth Potential. The session discussed challenges hindering grassroots access to financial services
• Riding on the Wave of Impact Investing. Participants spoke about the rising trend in impact investments and opportunities for international investors in this space
• Blueprint for Inclusivity. Putra shared about Amartha’s hybrid approach to building an inclusive financial ecosystem across Southeast Asia which includes education and innovative tech solutions

In 2023, Amartha secured foreign institutions facility commitment for MSMEs financing from three esteemed organisations, comprising a USD $285 million contribution from Community Investment Management, International Finance Corporation, and Credit Saison. It has, thus, maintained a profitable track record for the past three years. Leveraging this track record, Amartha aims for continued growth and impact in the region.

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