Indonesia’s online lenders face a dilemma: Go at it alone or work with a digibank

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Hi readers,

I grew up in a humble neighborhood where loan sharks roaming the streets was a daily sight. One day, while I was playing at a friend’s house, a middle-aged man stormed in and started yelling at my friend’s mother, telling her that if she didn’t pay her dues, he would run out of business.

I used to think that the man’s demand was pointless: Why should customers care about his business continuity? But now I understand better where he was coming from because I’ve learned that traditional lenders rely heavily on their own pockets to keep the ball rolling.

Facing the same challenge today, digital lending platforms are seeking external boosts. In the past year, a few Indonesian online lenders have lengthened their money pipes through mutually beneficial relationships with digital banks, which have the privilege of bank credits.

However, it doesn’t mean that online lenders can’t thrive on their own. In my recent article, you’ll find out how online lenders and digital banks serve different segments. Subprime customers like my friend’s mother will be the niche that online lenders have a higher interest in.

— Budi Sutrisno, journalist at Tech in Asia

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