How Ayoconnect intends to ‘bank the unbanked’ in Indonesia

Southeast Asian open finance platform Ayoconnect has closed a $15m Series B funding round led by Tiger Global for its open finance mission. 

The round was joined by PayU, the payments and FinTech business of Prosus, and Alto Partners, as well as individual strategic investors, including Plaid co-founder William Hockey and Jerry Ng, president commissioner of Bank Jago. The company raised $10m in Series B funding towards the end of 2021.

Ayoconnect said it will use the funds to satisfy increasing customer demand for more products and use cases. Ayoconnect said it is already the largest open finance platform in Indonesia, with more than 200 API customers and 4,000 embedded finance products.

Ayoconnect’s stack is divided into two main areas. On the embedded finance side, Ayoconnect helps companies of any size launch financial products using APIs such as phone top-up, utilities payments, embedded insurance, and auto-billing. Banking-as-a-service APIs provide account opening, disbursement, credit, investment, savings, and other capabilities.

On the data side, Ayoconnect said it enables companies to make better decisions by pulling banking data, such as account validation, account balance, transactions, and liabilities. Ayoconnect also provides data on unbanked and underbanked people through bill payments, e-wallet, location, phone, ecommerce, payroll and other alternative data. New use-case APIs are added regularly.

The company has experienced exponential growth in the last 18 months, reportedly growing revenues 17x in that period. Ayoconnect is not alone, FinTechs in the region, particularly those offering digital banking solutions, are experiencing strong growth.

The phrase ‘banking the unbanked’ is used frequently with regard to less financially developed regions, Indonesia included. According to a report by TechWire Asia 130 million adults do not use a traditional bank account to access financial services such as loans and credit cards. Instead, they use FinTech services ranging from digital wallets to peer-to-peer (P2P) lending to fulfill their financial needs.

Moreover, gig workers in Indonesia account for 56% of the workforce, and as such often face difficulties obtaining loan approvals or other banking services through traditional financial institutions. Further highlighting the need for more inclusive financial services.

Ayoconnect said that although Southeast Asia is experiencing transformational economic growth, financial infrastructure remains a significant roadblock, particularly in terms of building a more inclusive financial system.

With its full-stack open finance ecosystem, Ayoconnect is looking to provide infrastructure for Southeast Asian companies in a seamless way. Instead of building or buying technology, Ayoconnect allows companies to embed more than 4,000 financial products in plug-and-play fashion through its network of APIs. 

Fady Abdel Nour, global head of M&A and investments at PayU, said, “At PayU, we have always believed in partnering with promising entrepreneurs who share our vision of a world without financial borders. Ayoconnect has built new rails for Indonesian finance as well as a one stop shop API for economic actors within it.”

Looking ahead, Ayoconnect said it will launch Indonesia’s first-ever direct debit service in the first half of 2022. This API will transform financial services for Indonesian consumers and their suppliers by automating recurring payments directly from customers’ bank accounts. Plans are underway to offer clients cards-as-a-service, and Ayoconnect is set to begin its regional expansion.

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