Depending on where you are in the world, the term ‘fintech’ can conjure up lots of different mental images

This story originally appeared on MDI Ventures’ blog, Island Cap.

While tech companies in Silicon Valley are focusing on sophisticated technology like AI-powered robo-traders for the stock market or mobile apps to make wealth management easier, startups in Southeast Asia are focused on something far more fundamental.

Fintech in Southeast Asia may one day soon mirror that of the West. But before that can even start to happen, local tech founders and funders need to get the region’s gargantuan unbanked population off the bench and into the game. The name of that game is basic financial inclusion. Let’s take a look from 30,000 feet.

Back in 2016, global auditing giant KPMG claimed that only 27 per cent of people in Southeast Asia had a bank account. This meant there was an absolutely mammoth gap when it came to financial inclusion, with about 438 million unbanked humans in the region. When the data came out, in places like Cambodia the number was crazy low (around five per cent).

In 2019, observable progress has been made. Some experts claim that the region’s banked population now sits at 47 per cent  — likely as a result of new tech and innovations coupled with government support. But still, that means we’re not even halfway there yet.

In all of Asia Pacific, Indonesia is seen by many as the most valuable untapped market for digital finance. In terms of population, the archipelago represents around 40 per cent of Southeast Asia. In 2019, 66 per cent of the country’s more than 260 million population remains unbanked.

Different investors have different theories about what fintech verticals to focus on. There are three that my firm is taking deadly serious.

Remittances

The word ‘remittance’ is often used to say sending money overseas to a friend or loved one. In the past, there was no fast or inexpensive way to do this, but today, there are multiple digital platforms cropping up that put wire transfers to shame.

The Asia Pacific digital remittance market size was valued at US$31.2 billion in 2016, and is projected to clock in at nearly US$216 billion by 2025, growing at a compound annual rate of 24.2 per cent over the next six years.

Also Read: E-scooter startup Beam sets up operations in Malaysia

As a time capsule frame of reference, we like to look at the Indian market, which today is already pulling in more than US$80 billion in annual remittances. The same thing will soon happen here in Southeast Asia, with Indonesia as ground zero.

The archipelago is already beginning to show signs of a sprouting market. That’s why we invested in a Singapore-based fintech company called InstaReM  — a cutting-edge remittance-focused firm that aims to make Indonesia its focal point.

This is something that really resonated with us because Indonesia has a massive base of migrant workers living abroad who routinely send money back home. A recent World Bank study found that more than nine million Indonesians work abroad, which is roughly seven per cent of the country’s total labour force.

Overseas Indonesians are currently on track to be sending more than US$9 billion back to the archipelago annually. These workers are among the country’s top foreign exchange earners and their contributions account for roughly one per cent of the nation’s GDP.

In the past, Southeast Asia’s unbanked population would have needed to find some way to collect remittances in cash. The amount that a bank would charge the friend or loved one to send payments via overseas wire transfers also  —  paradoxically  — acted as a weird little perverse incentive to remain unbanked (e.g. “Bank fees are too much. Why bother? Just send cash…”).

Now, with companies like InstaReM, people in Indonesia can get their remittances instantly via mobile phone. There are no hidden charges and users get mid-market rates with no margins added. Money can be pulled out directly from one’s local bank account.

Suddenly, the unbanked have a decent incentive to open a checking account.

Digital credit

In developed markets like the US, we can start to see a paradigm shift from plastic credit cards to mobile digital ones. But in emerging Southeast Asian markets like Indonesia, it looks like bank-issued physical credit cards will just never be a thing.

A laughable three per cent of the population uses them despite a bona fide e-commerce boom. Instead, the market is more likely just going to leapfrog straight into mobile digital payments, inclusive of credit or ‘pay later’ options.

After seeking to understand how Indonesian e-shoppers have behaved over the past decade, we invested in a company called FinAccel, with its flagship service Kredivo  — a digital offering which the media succinctly referred to as “essentially the combination of a digital credit card and PayPal.”

In short, Kredivo turns the user’s phone number into a digital credit card and provides a dedicated checkout area on local e-commerce sites (think Tokopedia, Lazada, and Traveloka). Kredivo offers the buyer a 30-day payback option, but also longer-term options of three, six, and 12-month payback windows. The 30-day option doesn’t incur any interest, but other plans do.

The bottom line, when it comes to the prospect of purchasing stuff online and paying for it later, is that cash-on-delivery is no longer applicable. This means consumers in Indonesia would need to open a bank account if they want to have this great credit payment option available to them.

To date, FinAccel is our largest portfolio company, having raised a US$30 million series B funding round toward the end of 2018.

Branchless banking

While easy remittances and digital credit may be excellent carrots to get people to join the formal financial sector in Southeast Asian emerging markets, in the end, we are not leaving this up to chance. We understand that convenience is the single most important ingredient for getting consumers into the banking system.

The problem in places like Indonesia is that it’s not at all convenient.

Also Read: Being the apex of the APAC is no menial feat for an outsider, says BigCommerce Director of Asia

The nation is a sprawling archipelago with more than 17,000 islands. The majority of its population lives in rural areas, where bank branches are scarce. The ones that do exist are filled to the brim day-in and day-out. Basic infrastructure and geography obstacles also make long-distance travel to the nearest bank a legitimately painful undertaking for those who have traditionally lived on cash.

This is why MDI Ventures invested in Payfazz, the first Indonesian startup to be accepted into Silicon Valley’s Y Combinator program. The platform coordinates with banks to build out a distributed network of bank agents that can operate anywhere, independent of a brick-and-mortar branch.

A Payfazz agent gets a balance from a bank and then acts as the middleman between a potential customer and said bank. The endgame is to have a distributed network of banking touch-points dispersed throughout rural and under-served communities in Indonesia.

Want to open a bank account in rural Madura? No problem. Just go visit your neighbour.

As you can see, in the end, it all comes down to banking the unbanked. In order to do it, we need to provide real incentives for consumers, while also making it painless to open an account. We routinely help smart global backers get in on Southeast Asia’s budding fintech game.

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Island Cap is MDI Venture’s blog, and a place for one-of-a-kind insights, analysis, theories, and key perspectives on Indonesia’s venture capital game as we know it.

e27 publishes relevant guest contributions from the community. Share your honest opinions and expert knowledge by submitting your content here.

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The Berrykitchen team will be placed on Yummy Corp to manage retail customers

Yummy Corp has officially acquired Indonesian online catering service pioneer Berrykitchen for an undisclosed sum. The whole Berrykitchen team will be joining Yummybox, one of Yummy Corp’s business units. Their apps have also been merged, and is now available for both Android and iOS devices.

“The Berrykitchen team is operating the Yummybox division under Yummy Corp. In terms of services, there are many things that are improved in ours, because we want customers to have a more seamless experience in ordering Yummybox,” Yummy Corp CEO Mario Sentanu said on Wednesday, May 29.

According to him, the decision to acquire Berrykitchen was based on a discussion between the two parties, which revealed a similarity on their vision. Berrykitchen also happened to have the same target market as Yummybox: Office employees with greater awareness of the health and taste aspects of the food they ate.

Through the acquisition, Sentanu expected Yummy Corp to become a forefront player in the field of online catering, as the company is now able to reach out to all segments.

According to the information that DailySocial has received, Berrykitchen founder Cynthia Tenggara has exited the company.

“This acquisition is the early step we took to strengthen our positioning the market while presenting a new experience of ordering the best quality food for office workers,” he said.

Also Read: What’s brewing at Berrykitchen’s new kitchen?

In total, Yummy Corp operates four business units: Food Service Management, which manages employees’ catering on daily basis; White Label Outlets which can be adjusted to client restaurants or cafes’ needs; Yummybox for practical daily luncboxes or meetings; and Yummy Kitchen, where Yummy Corp builds its own brands of fast food or work with other parties to sell them through digital channels.

The company operates two central kitchen in Tangerang and Central Jakarta to accommodate all orders. The Central Jakarta kitchen focussed more on finishing works and starting point for food delivery.

The kitchen is able to work on 12,000 to 15,000 portions of meal each day. Yummy Corp claimed that it is currently processing 4,000 to 5,000 portions each day, with services that reach Jakarta and Tangerang.

Sentanu said that Yummy Corp has more than 50 corporate partners with various needs, from catering service for events, employees, or clients. Some of these partners include Unilever and Wings.

New features on Yummybox

Since its merge with Berrykitchen, the company has performed several feature updates in their app, in order to attract more customers. Take example of Food Playlist, which aims to help customers make their daily meal choices. In just one click, the feature will prepare lunch menu for five or 10 working days.

The Food Playlist can also be adjusted according to user’s needs. There are options of budget menu, premium, healthy, international, and special themed meals such as Ramadan or Jakarta Anniversary. The prices ranged from IDR25,000 to IDR50,000 per portion.

Also Read: Indonesia’s culinary startup BerryKitchen raises US$1.25M in Series A

Other features include Skip, which was developed for customers with high mobility. If the customers had to have a meeting outside of the office, all they have to do is activate this feature before 10AM on delivery day. Yummybox then will not deliver the food to prevent it being wasted.

The Cancel feature is also available with the exact same requirement as Skip. Customers’ money will be fully refunded by Yummybox.

“Yummybox pays great attention to customer experience in every part of customer journey, from booking, cooking, to delivery. We even have our own R&D team to ensure that we provide a different menu each day,” said Yummybox Marketing Director Raetedy Refanatha.

Yummybox has been around since 2017. Yummy Corp itself is a startegic partner of Ismaya Group, an F&B lifestyle giant with more than 15 years of experience in Indonesian culinary scene.

Berrykitchen itself has been around since 2012. It has served hundreds of thousands of customers; mostly consisted of professionals in Greater Jakarta Area. The company has raised a Series A funding round from Sovereign’s Capital in 2015.

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The article Yummy Corp Resmi Akuisisi Berrykitchen, Berambisi Jadi Layanan Katering Online Terbesar was written in Bahasa Indonesia by Marsya Nabila for DailySocial. English translation and editing by e27.

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He earlier founded Kashmi, a P2P payments and digital banking platform with operations in Sri Lanka and Singapore

Alibaba-owned South Asian e-commerce company Daraz has announced the appointment of Rakhil Fernando as Managing Director for Sri Lanka, effective 1 June 2019.

In his role, Fernando will oversee the business strategy and operations of the Daraz in the island country.

“The team has accomplished a lot since Daraz launched in this market, with much of its growth in no small part due to the acquisition by Alibaba last year; within the last 12 months, Daraz has accelerated to the number one position in domestic e-commerce in Sri Lanka. My hope is to maintain this great trajectory, making e-commerce more accessible to all Sri Lankans,” said Fernando.

Also Read: Rocket’s Daraz a hit not just in Pakistan, but in Bangladesh and Myanmar too

A veteran of the startup ecosystem in Southeast Asia, Fernando was previously Director of Innovation for MetLife;s innovation in Asia, called LumenLab. Before that, he spent many years in the Singapore startup ecosystem, where his last role was founder and CEO of Kashmi, a peer to peer payments and digital first banking platform. Through his career, Fernando has also worked at Credit Suisse, Coutts & Co Bank, Batey Advertising in various roles.

Daraz is a leading online marketplace with operations in Pakistan, Bangladesh and Myanmar, and provides 10 million products in more than 100-plus categories. The company has built its own logistics company specifically designed for e-commerce operations, called Daraz Express.

In 2018, Daraz was acquired by Alibaba Group from Rocket Internet. As part of the Alibaba ecosystem, Daraz is leveraging Alibaba’s global leadership and experience in technology, online commerce, mobile payments, and logistics to drive growth in its markets.

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Incubated in the US-based blockchain incubator ‘Science’, SpringRole has raised money from from Bloomberg Beta and angels like Gil Penchina and Mike Jones

For Facebook, Twitter and LinkedIn, users are their key assets. Without users, no social networks can thrive in the market. It is actually users like you and I, who drive business to these sites.

But despite our valuable contributions, do we get adequate monetary benefits from these firms?

The answer is an emphatic ‘no’.

It is true that social networks like Facebook and LinkedIn provide us with a free platform to interact and share content with others, but it is still a bit unfair for them to not reward us — people who spend considerable time curating profile and adding valuable content. It is our data on which these businesses are built. More importantly, it is logical for networks like LinkedIn, which deal with the professional profiles of enterprises and individuals, to incentivise users as it increases the value of the business and ultimately the platform.

But rewarding the end user is highly unlikely to be in agenda of these behemoths in the near future.

The advent of blockchain, however, is changing things for the better. And one startup from India is already experimenting with the ‘user reward’ concept, but with a great spin.

Also Read: TradeFinex aims to minimise global infra investment deficit using its blockchain-powered P2P financing platform

“We are building SpringRole from the ground up, keeping all stakeholders in mind,” Founder and CEO, Kartik Mandaville, told e27. “Our users are fairly incentivised with crypto tokens for attesting and endorsing other users, ultimately providing a highly useful and validated resource for recruiters and prospective employers, partners and others. In fact, users are the central focus of our efforts.”

Weeding out fake profiles and credentials

SpringRole was started in 2014 by Mandaville, a graduate of Carnegie Mellon University in the US and an expert in machine learning and blockchain. A serial entrepreneur, he has earlier developed AutoBudder, a software that automatically wishes friends on their birthdays. In the past, he has also served as CTO of LetMeKnow.com, an online portal delivering internships, scholarships, conferences etc to college students in India. He is also a Kairos Global Fellow (2012).

Bangalore- and US-based SpringRole is a recruiting startup, which essentially provides verified resumes/profiles using the blockchain technology and a system of incentives.

“Resumes are usually the first point of contact that potential future employees have with candidates. They contain the key facets that we would like to showcase about our professional profiles,” Mandaville said. “However, these days it has become common to have falsified or incorrect information on resumes. The onus is on the employer to comb through resumes and use background verification and reference checks to make sure everything is valid.”

As per a study, Mandaville shared, about 53 per cent of resumes posted on various social networks contain some forms of factual inaccuracy. Thus, validation is important in hiring a new candidate. If the documents or claims are not genuine, they can become a major concern for employers and can eventually lead to rejection of the candidate. Plus, the existing attestation system is fraught with a lot of problems.

“There are many flaws in the current attestation system. They are time-consuming and expensive. There are very few practical methods for assessing the quality or the reliability of such claims apart from manual verification and engagement of third-party services. The current system is also inadequate while dealing with forged or inaccurate credentials. This can involve a lot of middlemen and is susceptible to fraud,” Mandaville said.

This is where blockchain comes into play. This centralised technology enables recruitment platform to develop an integrable and scalable solution, where everyone can have an immutable and synchronised digital ledger. “We feel this is the right time to build a protocol that allows people to have verified resumes and recommendations powered by blockchain. With this tech, it is now possible to cryptographically verify the information as and when you needed,” he added.

In his opinion, effective reference checking can prevent companies from making bad hires and weed out candidates who make false claims. Most reference checks involve checking attestations first made long ago, and these checks are repeated by many subsequent reviewers. “On SpringRole, people can view, get and share attestations on their professional profile, thereby creating a verified resume that they can share and use.”

Essentially, a user’s professional profile contains three parts: 1) educational qualifications, 2) work experience, and 3) skillsets. Each of these three will have their own flows to get attested. Once they are verified, SpringRole writes them to the blockchain. Claims related to educational and employment history will be verified by the respective organisations and can often be resolved with ‘True’ or ‘False’ attestation.

“Having said that, verifying the claim of being well-versed in a particular skillset is often harder. Other platforms have increasingly been incorporating tests and challenges to provide proficiency. While this does make it more objective, these exams can be gamed and must be maintained and standardised by a central authority. They also suffer from narrow scope — they are only able to capture the facets of skillsets that are objective in nature. Moreover, skillsets are not an exact science and there are varying degrees of proficiency in particular skillsets,” Mandaville elaborated.

Also Read: 3 startups are using blockchain tech to improve the lives of millions

“We tackle this problem by crowdsourcing a user’s reputation on a particular skill. People in the user’s network endorse his/her proficiency in a skill independently or at the user’s request. The number of people endorsing it and their individual scores in the particular skill that they are endorsing lets us compute a score for each user per skill and is a way to assess the skill level of a person,” he added.

The SpringRole will have two key facets: one, crowdcourcing the user’s reputation in a particular skill via endorsements, and two, verifying and validating your professional details via organisational attestations.

How it works

When you sign up on SpringRole, you import or add your profile to the platform. This generally includes your work experience, educational experience and your skill sets. Each of these claims once listed on the platform is verified by the concerned people or organizations.

For work experience and educational qualifications, the universities and companies concerned verify details and attest the claim with the protocol on the blockchain. This is a one-time verification and can be used whenever needed.

On SpringRole, your skill reputation is crowdsourced and depends on the people who endorse you on your skillsets. Skill endorsements are weighted according to the skill level of the person endorsing you and endorsements need to be accepted by the sender and the receiver before it counts.

Whenever people in your network earn rewards on SpringRole, you also gain a percentage of it along with the other users and organisations who have attested for that person.

SpringRole Tokens (SRT)

The startup incentivises attesters (it can be a person, companies, universities, course provider or examination provider) with SpringRole Tokens for referring somebody/company, or based on the weight of endorsements. Each action in linked to SRT and can be used for various transactions on the platform. The tokens will be deposited in the attesters’ blockchain wallet.

Incubated and seed-funded by US-based blockchain incubator ‘Science‘, SpringRole has also raised money from investors, including Bloomberg Beta and high-profile angels like Gil Penchina and Mike Jones.

But isn’t easy for sites like LinkedIn, which have billions of dollars in cash, to easily integrate blockchain into its platform and cannibalise your business?

“Of course, LinkedIn can do it, but they will not. Their revenues come mainly from recruiting and that’s their bread and butter, so it isn’t logical for them to focus on blockchain-based verifications. More importantly, of late LinkedIn has been focussing on newsfeed rather than user profiles. So they don’t seem to be adopting blockchain in the near future. If they do it, then it is very good for the world, and we can think of ways to work to with them,” Mandaville concluded.

According to Nitin Sharma, Advisor to SpringRole and a few other blockchain ventures, and ex-founding Principal at Lightbox Ventures, recruitment and verification are giant, broken markets that can naturally benefit from key facets of blockchain — reliability and immutability of the data, decentralisation and new ways of incentivising participants.

“Both credentials and attestations can mean so much more when cryptographically verified and backed by clever, weightage algorithms. That’s why Springrole is pursuing a very interesting problem,” Sharma said.

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As augmented reality moves away from our phones, the time might be now for investment

When it comes to investing in emerging technologies, there are few more exciting and faster developing than that of augmented reality (AR) and remote AR.

A significant number of the world’s largest tech companies are already beginning to turn their collective attention to AR.

Apple has been rumoured to be developing its own augmented reality headset while our understanding of what could be made possible by AR is only expanding thanks to the recent emergence of Remote AR.

Remote AR is a term that refers to technology designed to help improve AR integration into gaming and daily life.

Image: PwC

Industry excitement surrounding both augmented reality and Remote AR is palpable – so much so that PwC has forecast that investments in the technology could expand fourfold in some sectors.

But what role will Remote AR play in bringing value to investors? And can augmented reality continue to build its momentum into the next decade? Here’s a glance at what investors can expect when investing in an augmented future.

Remote control

The arrival of Remote AR carries clear and potentially revolutionary benefits for a range of industries.

We often associate both augmented reality and virtual reality with entertainment and video games – and we’ve good reason to when news of VR concerts are continually filling column inches. Remote AR is no different in terms of maintaining a level of focus on optimising our recreation time. WATTY is a fresh Remote AR brand that enables users to create digital avatars that not only interact with the real-world but with friends’ avatars from across the world too.

Despite Remote AR appearing to be a seamless fit for gaming and entertainment, there are key investment opportunities among more collaborative and potentially life-saving fields.

Spatial utilises Remote AR for collaboration purposes and has the power to turn just about any area into the sort of intuitive, action-packed office that wouldn’t look out of place in the film Minority Report.

Multiple users are able to overlay and interact with the augmented environment to delegate and discuss countless tasks and digest plenty of visual information. Similarly, applications like Avatar Chat also enables multiple users to visually interact with multiple friends in a more social setting.

One of the most important uses for Remote AR can be found emerging within healthcare. Imagine how significantly our access to high-quality healthcare would improve if surgeons could call on augmented reality glasses capable of displaying information in real-time that helps to guide them through actions that require flawless accuracy. Or if we could utilise Remote AR to gain second opinions on diagnoses.

Proximie is an organisation that’s keen to realise the potential that Remote AR holds for healthcare. In an industry that finds itself continually overrun, AR could make for the perfect solution in bringing significantly swifter service.

The rise of augmentation

Augmented reality has enjoyed something of a spectacular rise from residing in the shadow cast by its sci-fi enthused sibling, virtual reality, to being an omnipresent asset to just about every smartphone user in the world.

Snapchat filters aside, augmented reality is used in numerous iPhone applications – including the built-in Measure feature that’s capable of visually measuring out just about any surface or object.

Needless to say, Niantic has played a significant role in introducing Augmented Reality to many of us in its triumphant gaming app Pokemon Go!, which encourages users to capture digital monsters while out and about and battle them at places of interest. Such was the appeal of Pokemon Go!’s augmented format that since its 2016 release, the app has surpassed 800 million downloads worldwide.

So resounding has the rise of augmented reality been, that software solutions company The App is forecasting that the industry surrounding AR will rise from $27 million in 2018 to $209 million by 2022.

Image: TheAppSolutions

Cause for investment

Such seismic figures are bound to be a very welcome sight for prospective investors, and leading technology company AppReal, has directly identified AR as particularly advantageous for investment ahead of its VR sibling due to the hardware and software needed to implement augmented reality being readily available and currently more practical.

There’s also the matter of the company that investors will be in, and with Facebook’s Mark Zuckerberg and Apple’s Tim Cook already holding big ambitions for AR in the coming years, anybody looking to weigh in on augmented reality is bound to be in good company.

Elsewhere, Google is already running plenty of successful AR programs, including its convenient ‘Translate’ service that’s capable of superimposing textual translations on to of foreign texts and signage.

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Photo by My name is Yanick on Unsplash

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