Embracing Fintech in South East Asia: Interview with Mr. Reynold Wijaya

reynold_wijaya_modalku

Mr. Reynold Wijaya is a passionate entrepreneur seeking to make a positive impact in South East Asia. Prior to the founding of Funding Societies, a peer-to-peer lending platform (https://fundingsocieties.com/about), Mr. Wijaya worked as a leading executive in a reputable business conglomerate in Indonesia, focusing on operations and team management. Through his work, he realised the importance of support and funding to SMEs, and was determined to help SMEs grow. Mr. Wijaya earned a degree from Harvard Business School and graduated Summa Cum Laude from the University of Michigan with a Master and Bachelor degree in Industrial and Operations Engineering. He is also the co-founder of Let’s Go To School in Indonesia (https://letsgotoschooldotorg1.wordpress.com/about/), a non-profit organisation committed to helping financially challenged children resume education.

(Photo source: https://fundingsocieties.com/about )The Warwick ASEAN Conference Research Team had the opportunity to interview Mr. Wijaya to understand more about his peer-to-peer (P2P) lending startup, Funding Societies, and the impact of increasing digitalisation of banking services in the ASEAN region. Funding Societies was amongst the first P2P platforms in Singapore to forge a partnership with Singapore's DBS Bank, and has since expanded their operations to Malaysia and Indonesia.

1. What inspired you to set up Funding Societies?  

My co-founders Kelvin Teo, Iwan Kurniawan, and I aspire to create a positive impact in society. Previously, we came from jobs in private equity, management consulting, and company management. These roles were impactful for our respective companies, but we do not necessarily get to see the direct impact on society.SMEs are the economic backbone of any country. Singapore’s 180,000 SMEs account for nearly half of the national GDP and 70% of the workforce. Meanwhile, Indonesia’s 60 million SMEs account for 97% of the local workforce. We know that the “Missing Middle” situation is a major problem hindering SME growth; we also saw how marketplace lending is addressing and solving the problem in many other countries, so we wanted to bring the concept to Southeast Asia. We feel that marketplace lending can truly make a positive difference here.

2. What do you feel towards the increasing digitalisation of traditional banking services, and how can peer-to-peer (P2P) lending platforms value add to the financial landscape in ASEAN?

There is a real synergy between banks and P2P lending thanks to banking digitalisation. In fact, the digitalisation of banks has nurtured collaboration between both sides. We ourselves have partnered with DBS in Singapore and Bank Sinarmas in Indonesia.Given their regulation and capital requirements, banks have relatively strict criteria for credit underwriting, which makes many SMEs non-bankable. Moreover, the reasons many SMEs are unable to get financing from banks are because they lack collateral, years of credit data, etc. However, many of these non-bankable SMEs are creditworthy.By leveraging technology and alternative data, P2P lending platforms can offer uncollateralised loans to these creditworthy SMEs, bridging their growth into becoming bankable someday.

3. What were the main challenges that you encountered in establishing Funding Societies, and what challenges do you think continue to lie ahead, especially with regards to the company’s future expansion in Southeast Asia?

Building trust from lenders, borrowers, regulators, and the general public will always be up there, but building a leading, passionate, and innovative team who serve as our foundation is definitely just as important.

4. According to an interview conducted with Vulcan Post, your partner, Mr. Kelvin Teo, commented that "Funding Societies managed to launch in 95 days and help 12 SMEs (almost the highest amongst others) in just 185 days of our existence." Considering that fintech is relatively new to Singapore, what do you think have contributed to the strong consumer confidence it has received?

We are immensely proud to say that a year later we have helped almost 250 SMEs! To be perfectly honest, in this line of business, trust is our currency. As I said, building trust is key, so our focus is centred on building operations based on integrity. We are truly grateful and honoured to receive such trust.Read more on Mr. Kelvin Teo’s interview with Vulcan Post: https://vulcanpost.com/357301/fintech-startup-founder-kelvin-teo-raised-million-before-30/

5. What are the current attitudes of SMEs and investors towards fintech, and how do you anticipate their attitudes to change in the near future given the changing needs of investors and SMEs and increasingly digitalised platforms in Asia?

P2P lending is viewed very positively amongst SMEs. Many of them are willing to try it. In fact, they welcome P2P lending as an alternative source of financing. With it, they can get attractive loans without using collateral. As for investors, many believe P2P is a great alternative investment due to its attractive returns, manageable risk so long as you diversify, and short lock-in period. There is also a real feel-good factor knowing that you are helping SMEs.Digitalisation of platforms can only do good things for the Asian industry. More effective and cheaper operations, availability of alternative data to enable better credit and risk assessment – all these elements of digitalisation create better and more scalable performance.

6. While fintech is booming in China, it lags in Southeast Asia. Why do you think this is the case, and how South-east Asian nations can work on improving the fintech industry within the region?

To begin with, faster is not necessarily better for everyone. While fintech is booming in China, there are many problems arising with it, especially fraud. In every country, it is regulators who decide the fate of fintech, as finance is a very regulated industry. It is fair to say fintech has enormous potential, but at the same time, it carries risk or uncertainty. All in all, however, China provides a great benchmark for the fintech industry in Southeast Asia. Hopefully, regulators and players can learn from China and become even more effective.  

7. What is your advice for budding entrepreneurs in South East Asia?

I had the great honour of studying under Professor Clayton Christensen while in Harvard Business School. One thing I learnt was identifying the jobs to be done, so regardless which industry you end up in, always remember what job your solution needs to do! Usually, you cannot do too many jobs at once. On top of that, entrepreneurship is a fun, rewarding, but lonely journey with lots of ups and downs. Never stop fighting for what you believe in!