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Indonesian start-up looks at your online history to judge if you're a good credit risk

One-third of UangTeman's borrowers use loans to support their microbusinesses

PUBLISHED : Monday, 06 June, 2016, 10:32am
UPDATED : Monday, 06 June, 2016, 1:42pm

An Indonesian start-up has laid down a challenge to loansharks and pawnshops by offering microloans online to the roughly 113 million locals without bank accounts.

Called UangTeman, or "MoneyFriend," Indonesia's first online, short-term loan provider uses algorithms to determine borrowers' creditworthiness based on their internet surfing history, social media data and the devices they used.

No collateral was required and assessment took between two hours and a day, far shorter than one to three weeks at local banks and other microlenders, UangTeman chief executive Aidil Zulkifli says.

UangTeman offers a maximum loan of 2 million Indonesian rupiah (about US$150) for first-time borrows and the money must be repaid within 30 days.

About two-thirds of Indonesia's population above the age of 15 do not have a bank account or any associated credit history. According to the most recent World Bank data available, this was equivalent to about 113 million people in 2014.

Despite its seemingly risky customer profile, and the fact that it operated in an unregulated market, the default rate for the company in the last 15 months of operation was just 0.2 per cent, Zulkifli said.

Borrowers were equally split in terms of gender, earned US$400 a month on average and one-third used the loans to support their microbusinesses, he said.

"Giving access to credit for these microbusinesses is effectively the conduit between financial inclusion and good economic growth in the country," Zulkifli added.

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