Fairbanc

Bridging the MSME gap through digital microcredit

PROBLEM:

In Indonesia, 98% of all enterprises are MSMEs, most of which are not legally registered and do not have access to formal credit¹ . As most MSMEs do not delineate business and personal finances, they are vulnerable to climate shocks because of their high exposure to climate hazards and limited adaptive capacity to reduce risk. The initial market opportunity for addressing this challenge in the fast-moving consumer goods (FMCG) industry is estimated at over $580 million in Indonesia.

SOLUTION:

Improved credit scoring mechanisms and innovative solutions to improve credit access can resolve some of these barriers to inclusion.

Fairbanc, provides a fintech solution that enables unbanked or financially underserved MSME owners to make inventory purchases on a “Buy Now Pay Later” basis. The company enables this via its proprietary AI-powered credit scoring platform, which allows quick microcredit distribution to MSMEs. These are typically last-mile business that buy anywhere from $50-300 worth of products from larger consumer brands².

Fairbanc partners with large FMCG brand principals to access distributors and retailers, and provide credit management system and standing credit to FMCG distributors to assign credit efficiently to qualifying MSMEs. This enables distributors to provide terms of payment to MSMEs, who repay distributors ahead of the next order cycle. The risk management process is robust with 0% NPL to-date and storeowners growing their sales by an average of 35%³.

The FMCG industry is Fairbanc’s initial target market. 247,000 merchants have been onboarded from FMCG brand principals including Unilever, Danone, Nestle and Coca-cola. ADB Ventures is working closely with Fairbanc to access debt financing to grow its loanbook. This will allow 400,000 MSME operators to achieve greater financial inclusion and build climate and disaster resilience.

¹ United Nations Development Program, Indonesia, 2020

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