Exclusive: Indonesian online lender UangTeman had a rough 2018. Here’s what happened.

Last year, UangTeman, one of the bigger Indonesian online lending sites, hit a record. In August, it gave out almost US$3.1 million in disbursements, or the loans it extends to customers. That’s a growth of almost 3.5 times year-on-year.

The company had announced a US$12 million series A round exactly a year before, in August 2017. In an interview later that month with Indonesian paper Kompas, UangTeman founder and CEO Aidil Zulkifli talked about targeting US$71 million in disbursements for 2018.

Even with August’s record growth, it was an ambitious goal. But internal documents obtained by Tech in Asia from former employees detailed the many challenges that the firm would face not long after.

In November 2018, UangTeman’s loan disbursements fell by half to below US$1.6 million – a level last seen in the same month of 2017.

As this happened, other issues were afoot. A group of senior executives resigned throughout 2018, while in November alone, the company announced that its branch offices outside Greater Jakarta – all 13 of them – would temporarily suspend disbursing loans. The move sparked a horde of furious comments on the company’s Google Play app page.

Adrian Dosiwoda, UangTeman’s senior vice president of corporate affairs, says that the decline in numbers were a matter of course, stemming from decisions aimed at the long-term health of the business.

“[As] a four-year-old fintech company, it’s good for us to be able to detect [a problem] and be alarmed before it goes out of of hand, so we can act immediately, handle it, and create a mitigation system to prevent the same thing from happening again,” he tells Tech in Asia.

A period of growth suddenly stalls

Online lending in Indonesia, with its significant underbanked population, is a crowded space. UangTeman (which translates to “friend’s money”) is a major player, but more importantly, it’s one of the 78 fintech startups licensed by Otoritas Jasa Keuangan (OJK), the country’s financial services authority.

Founded by Zulkifli in late 2014, the startup lets users borrow between US$71 to US$213 (or up to US$427, for those in good standing), to be paid back in 10 to 30 days, with an interest rate ranging from 0.5 to 0.8 percent per day. When UangTeman first launched, it primarily aimed to be an alternative for people who would otherwise have used loan sharks. At times, however, it has been criticized for its supposed late fees and high interest rates, which could reach 16 to 27 percent when converted into a monthly rate.

In comparison, its competitors charge lower monthly rates: Modalku between 1 to 2 percent, Koinworks between 0.75 to 1.67 percent, and Investree between 1.1 to 1.5 percent. To be fair, these three players tend to target SMEs, thus offering higher amounts and longer credit terms. But Dosiwoda maintains UangTeman’s rate is within the cap set by OJK.

Among the company’s early backers is Indonesian venture capital firm Alpha JWC Ventures, whose fintech portfolio includes online lender Funding Societies and digital credit card Kredivo. UangTeman has since raised additional rounds of funding, including a series A round of US$12 million in mid-2017 from K2 Venture Capital and the Silicon Valley investor Tim Draper.

For online lenders like UangTeman, disbursements are the primary revenue driver, as they make money by charging customers interest and/or service fees on the loans they give out. According to Dosiwoda, the company has grown its disbursements by almost 300 percent each year on average since its founding.

UangTeman is a major player in Indonesian online lending.

Amid suspensions, marketing keeps going

Departures of early employees

A new round of funding