BRI: Ultra Micro Holding Aims To Expand Access To Funding And Finance To More Communities

President Director of PT Bank Rakyat Indonesia (Persero) Tbk (BRI) Sunarso. (Photo: Doc. Antara)

JAKARTA - President Director of PT Bank Rakyat Indonesia (Persero) Tbk (BRI) Sunarso said Ultra Micro Holding (UMi) aims to expand access to funding and financial access to more people at the best possible cost.

"Spirit the establishment of Ultra Micro Holding is so that all institutions, including business institutions under BUMN, can be more efficient and have a wider range of power," Sunarso said in a discussion on How Ultra Micro Holding Connects Finance to Millions in Indonesia in Jakarta, quoted from Antara, Friday, January 12.

Ultra Micro Holding has expanded access to financial services to micro and ultra micro communities in Indonesia and has become a sustainable new source of growth for BRI Group.

Since its formation in September 2021, Holding UMi has provided funding access for more than 29 million ultra micros and continues to focus on expanding access for customers who have not been served with comprehensive products and services.

Furthermore, Ultra Micro Holding set a target to be able to serve 45 million business actors as customers by 2024.

BRI's Holding UMi, PT Pegadaian (Persero), and Madani National Capital (PNM) recorded a total of 36.6 million customers as of September 2023, out of the total number of people who do not have access to formal financial services (unbankable). This means that there are still 8.4 million more people who must be caught by 2024.

According to Sunarso, the potential for financing in the ultra micro business segment is still very large, so there is a potential and abundant source of growth in that segment.

However, there are challenges in the form of high operational costs and operational risk because it involves many people and many places. For this reason, digitization is one solution to realize efficiency.

"With digital we can solve high operational risk problems and high operational costs," said Sunarso.

In 2018, there were 45 million ultra micro businesses that needed financing. Of the total, only 15 million ultra micro businesses have been served by formal financial services, consisting of three million UMi businesses served by banks, three million pawns or pawn lending, six million to group lending, 1.5 million to BPR and 1.5 million fintech.

Meanwhile, five million ultra micros meet the funding needs of loan shark and seven million to family and friends, while 18 million are not served at all.

"In moneylenders, the interest is the cheapest, 100 percent is calculated annually and up to 500 percent a year," he said.

Furthermore, based on the latest research, Sunarso said ultra micro businesses that needed financing increased to 48 million. Of the total, those who have been touched by formal financial services have also increased from 15 million to 34 million ultra micro businesses.