Bridging the Gap

Komunal provides a platform that connects depositors to rural banks that rely on brick-and-mortar branches.

- Elisa Valenta

Indonesia's banking sector is undergoing a digital transformation. As part of the evolution of digital banking, financial technology firms, primarily fintech lending firms, have also been actively partnering with Rural Banks (Bank Perkreditan Rakyat/BPR). Around 1,500 rural banks are dotted across the archipelago, serving as an alternative financial provider for communities not served by commercial banking, particularly those in remote areas.

Rural banks are a subset of conventional banks and typically do not provide payment services. Their banking activity is more limited than that of other commercial banks, as the law restricts their activities to a single province, and as a result, they have much lower capital requirements than commercial banks. Their financial constraints are also hindering many of them from keeping up with digital trends.

While these rural banks are restricted to lending within their respective provinces, they can accept deposits from all over the country. However, owing to the fact that the majority of rural banks are located in non-urban areas and lack digital channels, rendering their products inaccessible to urban depositors, these 1,500 rural banks only account for only about 1.5% of total depositors in the country.

As a result, many rural banks are actively developing new strategies to attract depositors through collaborations with fintech firms such as Komunal. Komunal is a fintech firm that leverages rural banks to provide peer-to-peer (P2P) lending services. Komunal, which was founded in 2019, connects depositors and savers with rural banks that rely heavily on brick-and-mortar locations.