municipal reaches the customers in rural Indonesia by going where they are. The fintech partners work with more than 220 banks in tier 2 and tier 3 cities across 19 provinces. Founded in 2019, the startup announced today that it has raised $8.5 million in funding led by East Ventures Growth Fund, with participation from AlphaTrio Sustainable Technology Fund, Skystar Capital, Sovereign’s Capital, Ozora and Gobi Partners.
Komunal is digitizing rural banks called BPRs (Bank Perkreditan Rakyat) through its DepositoBPR platform, which allows users to digitally deposit money and apply for loans without having to visit their bank’s physical location. In addition to DepositoPR, Komunal also has a peer-to-peer lending platform that connects MSMEs with lenders.
The startup says its platform has channeled IDR 3.6 billion, or approximately $230 million USD, in deposits and loans to BPRs and MSMEs by 2022, representing 350% year-over-year growth from $50 million in 2021. It expects transaction volume to grow to exceed $500 million USD by this year and have positive EBITDA since October 2022.
Komunal was founded three years ago as an SME financing platform in Surabaya, East Java. CEO Hendry Lieviant told TechCrunch that the startup initially benefited from little competition because most lending fintechs were based in Jakarta, but then they realized that a lack of data and Indonesia’s SME culture could limit its scalability.
Another opportunity presented itself in the form of Indonesia’s 1,500 BPRs. “They have strong local connectivity, but their recent performance has been lukewarm and unable to keep up with digitization,” said Lieviant. “Combined, they made up only about 2% of the Indonesian banking market, although they have much greater potential.”
Customers can access banks through the DepositoBPR app. From there, they can choose their nationwide banking and deposit product, create a virtual account and transfer money directly into it. Lieviant said they can also get government-guaranteed deposits with higher interest rates.
Komunal’s new funding will be used to market DepositoBPR and build its core banking system for rural banks. The company also announced that Dr. Peter Jacobs, a former Executive Director of Bank Indonesia, as a Supervisory Board member and will continue to hire for senior positions.