Payfazz's GMV The four-year-old Payfazz started out as a platform for Indonesians to recharge their mobile value and pay bills. Hendra Kwik Payfazz

Napkin Takeaways: Hendra Kwik of Payfazz

In this series of quick takes, we crystallize the highlights of founder interviews into bite-sized digests for your reading pleasure. If you have a quick minute between meetings, or feel like some light reading, we have your back. In this piece, we sum up three key takeaways from Hendra Kwik, co-founder and CEO of Payfazz. The startup is a fintech platform that aims to build a network of distributed banking agents to enable a fully-digital mobile banking & payment solution for 440 million unbanked in Southeast Asia. Aside from its agent network, Payfazz has also launched a portfolio of mobile services that facilitate routine financial tasks for Indonesians without formal banking accounts, including bill payments and loans.

1. Financial inclusion can’t happen without education about financial services.

“There are many people who don’t understand the importance of financial services,” Hendra said in his interview with Hans and Dimitra.  “When you go outside the main cities in Indonesia, we see a fairly rare presence of bank offices or brands. Because of that, many people are not aware of the existence of banking services, and they don’t know how to use it.”

And it’s not for lack of access, as Hendra went on to note the presence of banking applications in mobile app stores. “There’s a missing link in the education part. And we feel like building the agent network can help solve this issue.”

Hendra firmly believed that awareness and ability to use banking services were critical to improving the livelihoods of his countrymen. “I cannot imagine that people in the rural [areas] never store their money in the savings account and get some interest…never have the chance to expand their business because they don’t have capital access. I cannot imagine the people in rural areas are never able to think about saving their money to send their kids to the colleges later on. On the other side, we see in the city everyone is aware about this, so…we use our agents to educate them.”

2. Building a network with a vested interest in the success of Payfazz was essential to its growth

The agent network began as an answer to bridge the gap between banking services and users, and grew into something Hendra and his team did not expect – they also became Payfazz’s advocates and community influencers. “There’s some sort of word-of-mouth among the agents,” Hendra recalled. “When they start providing the services, we see some stores telling the other stores that these kinds of services are very useful, to help bring in more services to the customer and keep their customers loyal.”

The network was also an important stimulus for local warungs, small mom-and-pop convenience store-cafe hybrids which were central to social life for Indonesians. ”A lot of unbanked [are] spending the time at warungs or restaurants. A lot of our agents actually are either warung owners because they interact a lot with the unbanked population or some small restaurants who also try to provide money transfer services,” he explained. “That’s the main reason why Payfazz is quite beneficial for both warungs and restaurants as well as the consumers.”

3. Collaboration, not competition, is the way forward.

As Payfazz ventures further into the fintech sector, it sees itself as a complement to larger players in the space, not competitors. While more established companies like GrabPay and OVO have more market awareness, Hendra is unfazed. “GoPay and OVO are still not answering the core problem of financial inclusion yet because they are still rotating in the city,” he pointed out. “We are not really targeting people in the city. [Our strategy was] always evolving around warungs because we want to target the market that doesn’t have banking yet. And this market who don’t have banking [access], typically they haven’t used GoPay or OVO.”

The reliance on cash in rural Indonesia and smaller appetites for transactions were also key reasons why Payfazz’s ecosystem of agents worked so well – people were less interested in banking their money for savings and more focused on transmitting cash to relatives and sending money for goods and services.

Between the efforts of Payfazz and other banks, financial literacy is growing, As these unbanked customers learn about the benefits of formal banking services and wish to enter the system, Hendra is optimistic about the future. “We feel like we can build a joint product with the banks to deliver banking services in a fairly scalable way,” he opined. “Now we can really extend their services to everyone in the country by combining the power of technology, Internet access, and also [our] agent network.”

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