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    Integrated Digital Core Solutions for Microfinance

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    By utilizing Integrated Digital Core Solutions, microfinance institutions can implement automation capabilities, and focus on developing and accelerating their business without having to be burdened by the expensive Investment or Capital Expenditure of buying IT devices, as well as difficulties in recruiting talents who have trained IT skills, or high costs to add more branch network.

    Integrated Digital Core Solutions for Microfinance

    Digital solutions for Microfinance Institutions (BPR, BPRS, KSP, KSPS and Fintech (Financial Technology) which are packaged in the form of mobile and cloud-based services, which support operational and collaborative activities safely, reliable, and equipped with Disaster Recovery features.

    It is a partnership in the form of an alliance of partners which involves IKKAT, Turnkey Lender, InfoConnect, Invision and Datacomm. In this alliance, Datacomm provides Datacenters that have obtained ISO 27001, ISO 20000, PCI-DSS, Rated-3 TIA-942 and DCOS-4 certificates.

    This complete and integrated solution consists of:

    1. Integrated Digital Core Solutions for Microfinance.
    2. Automatic Solution with Cloud Based Loans to Microfinance Institutions by Using Artificial Intelligence (AI) and Integrated Scorecards.
    3. Integrated Financial Information System and Document Management with DOCUFLO.
    4. Internet-based Contact Center for Microfinance Institutions to meet regulations with the latest economical and simple technology

    The challenge of Microfinance to develop

    The IT system is the "HEART" of the Microfinance Institution (LKM). To be able to operate efficiently and effectively it requires reliable, scalable, and secure IT system support.

    However, there are challenges faced by Microfinance Institution in developing IT systems to support their business, such as:

    In digital age, Integrated Banking IT applications are widely used by large financial institutions to serve customers online. This is a demand from customers who expect convenience in their transactions.

    BI and OJK regulations indirectly respond to demands from customers by investing in information technology.

    Chairman of the Board of Commissioners of the Otoritas Jasa Keuangan (OJK), Muliaman D Hadad (10/7/2017) mentioned the problems faced by Conventional / Sharia Credit Banks (BPR-BPRS) and Savings and Loans / Sharia Cooperatives (KSP-KSPS) both from the external side and the internal side.

    On the other hand, for middle-sized and smaller financial institutions, such as most BPR / BPRS and KSP / KSPS, the implementation of integrated IT turned out to be a challenge. The challenge is represented by the question, whether the large IT investment will enable more rapid business development in the future, or whether it is only a waste of expenditure, without producing an adequate return.

    EXTERNAL SIDE INTERNAL SIDE
    1. Facing Competitors in the Small Micro Segments (LKM, Credit Union, Fintech) 1. Cost overruns
    2. Potential customers / members are reduced 2. Impact on interest rates
    3. Products and services have not varied

    One of the ways to stay competitive in the modern world is the integrated implementation of Information Technology. There are BPR-BPRS and KSP-KSPS who have already carried out this proposal, who have a turnover of hundreds of billions of rupiah and are willing to invest and implement IT which enables new services to support their business development.

    On the other hand, for middle-sized and smaller financial institutions, such as most BPR / BPRS and KSP / KSPS, the implementation of integrated IT turned out to be a challenge. The challenge is represented by the question, whether the large IT investment will enable more rapid business development in the future, or whether it is only a waste of expenditure, without producing an adequate return.

    Total number of cooperatives 152.282 units 100%
    Number of consumer cooperatives 97.931 units 64,31%
    Number of producer cooperatives 27.871 units 18,30%
    Number of savings and loan cooperatives 19.509 units 12,81%
    Number of service cooperatives 3.661 units 2,40%
    Number of marketing cooperatives 3.310 units 2,17%
    Sumber RI Punya 150000 Koperasi, kontribusi ke Ekonomi Hanya 4%
    Status Per 5 Juli 2017

    Tabel 1. Number of cooperatives in Indonesia

    Total BPR 1.603 units 100%
    BPR with assets <1 billion 8 units 0,50%
    BPR with assets of 1 to 5 billion 105 units 6,55%
    BPR with assets of 5 to 10 billion 171 units 10,67%
    Rural Banks with assets > 10 billion 1.319 units 82,28%
    Total SRB 168 units 100%
    Sumber Statistik Perbankan Indonesia Juni 2018 dan Statistik Perbankan Syariah Indonesia Juni 2018
    Status Per Juni 2018

    Tabel 2. Number of Fintech in Indonesia

    Fintech number 62 units
    Sharia Fintech number 2 units
    Sumber Direktori Fintech (P2P Lending) Juni 2018
    Status Per Juni 2018

    Tabel 3. Number of Fintech in Indonesia

    The Role of Microfinance Institutions to support Small and Medium Enterprises

    According to the McKinsey Institute, "Indonesia has more than 59 million MSME actors who have contributed as much as 56 percent of the country's total economy". These MSMEs need financial service support, for example capital to develop. But in reality, there are obstacles in the banking industry and the MSMEs themselves so that financial service support cannot be fully implemented.

    As an alternative, there are Microfinance Institutions such as BPR, BPRS, KSP, KSPS and Fintech companies to help these MSMEs to continue to develop, for example by channeling credit to MSMEs in remote areas / provinces. And now, microfinance institutions have become a very important part in the growth of MSMEs, which ultimately contribute to Indonesia's economic growth.

    Figure 1. Adopsi IT oleh SME adalah yang terendah

    (Sumber: Asia Cloud Computing Association, The Market for Cloud Computing 2015)

    There are several things that are expected with the existence of microfinance institutions delivered by several officials :

    1. Fernandes Lambert, CSMO of PT Ikkat Inovasi Teknologi, which offers banking services that are not carried out by office networks but with other parties
    2. Sudibyo, VP of Sales & Marketing Invision wants to complement services to customers at affordable costs to be close to consumers
    3. Budi Haryanto, Marketing Manager of Turnkey Lender who wants to help Microfinance Institutions change CaPex to OpEx so that they are not burdened with large investment costs and can focus on running their business more optimally
    4. Andy Phan, President Director of PT InfoConnect Solusi Indonesia also explained that microservices institutions need to follow technological developments, one of the technology is digitizing documents that will provide benefits, such as avoiding the fraudulent use of documents repeatedly for loan applications

    Digitalization Factors that must be considered by Microfinance Institutions

    Datacomm Cloud Business (DCB) offers integrated digital core solutions for cloud computing-based microfinance, specifically for BPR-BPRS and KSP-KSPS. This integrated digital core solution for microfinance is a combination of some of the best applications from DCB partners who are experts in IT solutions related to the financial industry.

    The applications mentioned above are already integrated and can be used at the beginning of a subscription. The access to these services requires a login account and password to determine which applications can be accessed, according to the subscription package.

    What microfinance applications will be offered?

    Extended core banking application, equipped with credit scoring (Lending Origination System) facilities. It also provides document management (secured) applications, call centers and options for: email applications (with domains), backups and disaster recovery.

    How much investment should be spent?

    With cloud-based, investment to get these applications is very minimal, because it is based on Opex (Operation Expense), which is a subscription payment based on the number of transactions per month for a minimum contract a year. In the initial stages of implementation, access equipment is only needed, such as computers / laptops or mobile phones or tablets to access these applications via the web / internet.

    In addition, the BPR-BPRS and KSP-KSPS can determine which applications to subscribe to such as core applications (core banking and credit scoring), and can add other applications later on to the package.

    Integrated Digital Core Solutions Products Description

    ICE atau Internet Customer Experience, is an application that utilizes the internet in interaction with verbal interpretation, images and text, to enhance customer experience. This is very suitable for enterprise companies in interacting with customers, as well as with internal organizations.

    ICE applications are utilized by 3 (three) functions with supporting equipment, such as:

    • Agents (using a computer with Windows 10)
    • Team (using an Android smartphone)
    • Customers (using an Android smartphone)

    All of the above functions require an internet connection.
    Examples of appearance are as follows:

    Business Automation Solutions for Your Credit.
    Turnkey Lender solutions include:

    1. Automation: a system that automates the entire lending process from origination to reporting.
    2. Credit Scoring: increase the accuracy of loan approval.
    3. Pay-per-active-loan system: offers a software system with prices tailored to the needs of BPR / KSP.
    4. Featured Features: has a variety of features that can facilitate the lending process.

    Examples of appearance are as follows:

    Simpool, microfinance digital core solution
    Simpool has the following supporting features:

    1. Digital and P2P loans
    2. Agency and Branchless
    3. Digital Savings
    4. Payment and PPOB

    The Simpool application is accessed from Android smartphones, Android tablets and Windows PCs.

    Docuflo eCabinet, an integrated eCabinet solution for managing your loan information. This solution speeds up the sales process, reduces compliance risk, reduces operating costs by automating routine processes of archiving and storage space.

    The Docuflo eCabinet solution connects 3P (People, Paper, Process), so we get:

    1. Increased cost efficiency
    2. Collaborative ability
    3. Increased compliance
    4. Improved customer service
    5. Sustainable business

    The Docuflo solution implements a high level of security with AES 256 encryption.
    The Docuflo Solution also records all access made to documents in a secure and auditable log.
    Example display of document security level:

    Additional Material


    Support Materials



    Peraturan OJK Nomor 75/POJK.03/2016

    Amanat yang telah ditetapkan oleh Otoritas Jasa Keuangan (OJK) melalui Peraturan OJK Nomor 75/POJK.03/2016 tentang Standar Penyelenggaraan Teknologi Informasi Bagi Bank Perkreditan Rakyat dan Bank Pembiayaan Rakyat Syariah. Adapun bunyi dari peraturan tersebut adalah "Pasal 2 Ayat 1 peraturan tersebut menyebutkan BPR dan BPRS wajib menyelenggarakan teknologi informasi yang paling sedikit berupa aplikasi inti perbankan dan pusat data bagi BPR atau BPRS yang memiliki modal inti kurang dari Rp 50 miliar. Selain itu, bagi yang memiliki modal inti sedikitnya Rp 50 miliar, menyelenggarakan aplikasi inti perbankan, pusat data dan pusat pemulihan bencana. Read More

    Market Opportunities and Regulations Microfinance in Indonesia - Devi Erna Rachmawati

    Cooperative is a collection of people to work together for the common welfare. Indonesian cooperative was born on 12 July 1947. The cooperative business in Indonesia is based on Law No. 25 of 1992. Under these laws, cooperative growth become more flexible because cooperative societies are treated as same as other forms of business entities. Cooperatives in Indonesia has a strategic role in driving the economic pulse of the community and national development.The cooperative business model is the manifestation of the constitution, the 1945 Constitution Article 33, paragraph 1, which states that the economy is constructed as a joint venture on a family basis. Download

    Statistik Koperasi Simpan Pinjam Indonesia 2016 – Biro Pusat Statistic

    This paper provides a systematic assessment of market opportunities and regulations microfinance in Indonesia based on social economic, demographic conditions, potential SMEs Industry, market segmentation, market penetration and how new regulations microfinance in Indonesia. Indonesia has potential market for microfinance sector, with a range of commercial banks and over 60,000 MFIs, more than 28,07 million poor people or 11,37% from total population and more than 55,8 million microenterprises representing 98,79% of the total business industry in Indonesia. Download

    Challenges in MicroFinance - Ernst & Young

    We describe the latest trends in the microfinance industry and present how EY, as a key provider of services to microfinance institutions (MFIs) and microfinance investment vehicles (MIVs), has the knowledge and experience in handling the challenges you face. We also describe EY's position in the microfinance industry— sharing the services and support that we can provide. We share your passion for this fascinating industry and are eager to continue to work with you or to start a dialogue with you. To find out more, please call one of our global or regional contacts whose contact information can be found at the end of this brochure. Download

    Branchless Banking and Micro Finance - KPMG

    In this publication we take a look at the new Branchless Banking (Laku Pandai) regulations and the introduction of a Microfinance Law, which are intended as a catalyst for domestic banks to provide basic banking and insurance services to a higher number of low-income Indonesians in remote places. We consider the existing microfinance landscape, size of the opportunity and implications of the new regulations for existing and new players to the Indonesian market. We hope you find this publication helpful as you think about future opportunities and the shifting market dynamics in which we now operate. Download

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