How credit analysis can help Tokopedia score against ecommerce rivals

Ecommerce players are finding that the large pool of user data they’ve been sitting on can come in handy for their fintech endeavors.

In Indonesia, Tokopedia is one of the pioneers in using ecommerce activities for credit analysis, offering the service through its credit-scoring arm, Semangat Digital Bangsa (SDB).

Also known as Tokoscore, SDB analyzes the risk profile of a potential borrower based on the individual’s behavior, activity, and transaction history on Tokopedia. Apart from Tokopedia units like peer-to-peer lender for businesses Dhanapala, third-party firms such as buy now, pay later firm Kredivo also use SDB to assess the creditworthiness of their prospective borrowers.

Photo credit: Tokopedia

In addition to credit scoring, Tokoscore can also validate personal information such as addresses and phone numbers, predict financial capability based on a user’s transactions on Tokopedia, and raise red flags about an individual who exhibits negative usage behavior on the platform.

By using SDB, Dhanapala can provide business capital loans to business owners including local MSMEs on Tokopedia in “a more effective and efficient manner” compared to the manual verification, Tokoscore director Evita Soetjoadi tells Tech in Asia.

The ramped-up efforts into Tokoscore come at a time when GoTo, Tokopedia’s parent firm, is prioritizing on-demand, ecommerce, and fintech services over its ride-hailing business as quarterly losses widened in Q2 2022.

Besides Dhanapala, there are opportunities to expand the service to users of GoPay and the wider GoTo ecosystem, which includes investment platform Pluang and digital bank Bank Jago. Over 6% of e-wallet users and 12% of companies are expected to take digital loans by 2025, according to a Morgan Stanley report.

Tokoscore also helps external clients, which range from major multinational banks and multifinance businesses to smaller institutions such as regional banks and microfinance firms, to expand their customer base.

Perhaps more importantly, the service could enable millions of underserved people and businesses to access services from formal financial institutions.

Mitra Tokopedia / Photo credit: Tokopedia

In Singapore, verifiable information about users is extensive and readily available. But in Indonesia, the lack of credit history or bureau data means that many individuals and MSMEs have been classified as “high risk,” which led them to be rejected for loans, says Sanjay Uppal, CEO and founder of Finbots, a credit-scoring startup based in Singapore.

Also, credit card penetration in Indonesia remains at 6% of the population. According to an International Finance Corporation (IFC) report, there is a US$165.8 billion financing gap for creditworthy MSMEs in the country.

A pioneer in the space

A “powerful” input in credit scoring

Challenges remain