Inspired by Grameen Bank in India and seeing the great potential of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia, Andi Taufan Garuda Putra, a 2004 alumni of the SBM ITB founded Amartha. Taufan raised capital from family and friends to establish a Microfinance Institution (LKM) that focuses on helping women build their businesses.
“[In the past] I went around the village myself,” recalled Taufan during Amartha’s initial operations while presenting a guest lecture on Digital Economy and Fintech in Bandung (18/11).
Amartha chose MSMEs because of their exponential growth. For example, a food stall in a traditional market can turn over the loan money to 500% of its initial value. This growth is rare in larger companies.
When he became an MFI, Amartha faced problems accessing funds after reaching 10,000 borrowers. Banks ask for collateral to provide more significant funding, even though ultramicro and micro-business owners do not have adequate collateral.
In 2015, with the investment from Beenext, Amartha transformed into a Peer-to-Peer (P2P) lending platform. P2P Lending allows entrepreneurs to obtain funds without providing collateral.
Amartha’s advantage over other microfinancing companies is its strict customer profiling. Customer profiling is carried out using a referral system. This system ensures that a third party guarantees the character of the prospective borrower.
Additionally, Amarta also has a community-based business model. The “joint responsibility” system was formed to support the installment payment capacity for MSMEs in the low business phase.
To face competition, Amartha uses a “high-quality customer retention” strategy, namely utilizing technology to create a financial ecosystem, from lending services to payments for borrowers.
“We also offer a flexible repayment scheme to adapt to the MSME business cycle,” added Taufan.
Now PT Amartha Mikro Fintek (Amartha) has inspired many people, becoming a fintech pioneer funding many Indonesian women entrepreneurs.
