Value Proposition of Fintech

Challenge of Establishment
Adrian A. Gunadi
Chairman Indonesian Fintech Lending Association
Co-Founder & CEO Investree

Jakarta, 15 June 2020

This presentation document is strictly confidential and solely for the use of PT investree Radhika Jaya
and investree (Thailand) Limited. The content have been summarized to suit presentation needs; for
actual definitions, descriptions and exclusion, please refer to the corresponding directorate.

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1 Fintech Lending in Indonesia
Copyright © 2019 | PT Investree Radhika Jaya
 Introduction to Fintech
Definition

FinTech
Fin-tech | \fin-tek
noun

Definition of FinTech
: products and companies that employ newly developed digital and online technologies in the banking and financial service industries.

// The impact that fintech is making throughout our economy is still in its infancy stages. Fintech is really just about innovating and
bringing solutions to the banking lending and capital markets.

Source: Miriam Webster Dictionary

Copyright © 2019 | PT Investree Radhika Jaya
 4 Factors Driving
Fintech Development

Demographic • Digital affinity of the • Blockchain technology / Technology

generations cryptocurrency
Development • Millennials will dominate • Big data
assets under management by • Data science
2020 requiring online • Digital identify management
interfaces mixed with remote • API models
human advice • Artificial intelligence
• Digital natives will
increasingly enter the
workforce

FINANCE
• PSD2 (payment service • With a low inflation and
deregulation) negative rates environment,
• Basel III there will be a need for better
• No forex fees, enabling global advisory in riskier asset
transactions classes in order to obtain
higher returns
• Financial crisis
• Consumers distrust banks Financial Market
Regulation Environment
Source: Roland Berger Copyright © 2019 | PT Investree Radhika Jaya
Fintech Trend
The Impact of Fintech on Financial Services Sector

Key disruptive trends Impact on FS sector

• Alternative banking
DEPOSITS channels
Lean, automated, Big
processes Data

• Alternative lending
• Alternative credit scoring
LOANS
Peer-to-peer Alternative Social Credit • Shifting customer preference
Adjudication Scoring

• Empowered investors
INVESTMENT • Process externalization
Social trading Automated Advice Empowered Retail • Crowd funding
& Wealth Management Angel Investors Algorithmic

• Cashless world
PAYMENT • Emerging payment rails
Mobile Streamlined Integrated Next Gen
Payments Payments Billings Security
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 Impact of Fintech Lending
To Minimize the MSME Credit Gap
Many MSMEs lack the financial knowledge to
comply with the procedures and requirements set
out by conventional banks
Financial Knowledge

High customer acquisition and Bank of Indonesia Regulation

Less Focus
servicing costs in rural areas as Despite No. 17/12/PBI/2015 enforces
traditional banks do not High Bank Costs
Regulatory a minimum 14% credit portion
leverage technology Enforcement served to MSMEs by banks.
$172,5 Bio
MSME Credit
Gap in
Indonesia Many large banks focus more
63 million MSMEs in on corporate sector, evident
Indonesia are considered High Growth of in the higher growth of
high risk and “unbankable”, Unbankable Corporate Sector corporate vs MSME
with no collateral and no credit
history
Lack of Robust
Credit Scoring
Lack of robust credit scoring system, with the
credit assessment process being labor intensive

6
Source: Bappenas (2017 & 2018), SME Finance Forum (Managed by IFC), The Edge Singapore – “Addressing Indonesia’s Financial Inclusion, Copyright 2019 | PT Investree Radhika Jaya CONFIDENTIAL
PWC: Indonesia’s Fintech Lending: Driving Economic Growth Through Financial Inclusion Gap”,
 Market Opportunity
Fintech Lending to reach USD 15.8 bio by 2020
Fintech Lending in Indonesia will reach USD 15.8 bio of accumulative loan disbursements in
2020 , with USD 5.7 bio in 2019

Fintech Lending Market

Key Drivers of Fintech Lending Growth
Accumulative Loan Disbursements (USD mio)
15,797 Mobile phone subscription growth is steady going
forward, which supports the awareness and adoption
CAGR
214% rate of Fintech Lending

The increase use cases of Fintech Lending, as a

result of collaborations with other digital platforms (ie.
5,772 E-commerce, ride-haling, logistics) and acceptance
from various customer segments
CAGR
793%
1,629 The development of supportive IT infrastructure and
21 184 digital IDs, resulting in wider coverage and faster
KYC processes, which will produce a steady
2016 2017 2018 2019 2020 retention and adoption ratio

Actual Forecasted
7
Source: PwC, OJK, World Bank, Global Findex 2018 CONFIDENTIAL
Copyright 2019 | PT Investree Radhika Jaya
Exchange rate: 1 USD = 14,117 RP
 Indonesia Fintech Ecosystem
Fintech Lending in Indonesia Has The Highest Proportion

2%
P2P Lending as the Highest Proportion
3%
4%
4%
P2P lending with OJK Full License: 33 Companies
4% P2P Lending Registered P2P Lending: 161 Companies
40%
Payments
9%
Market Provisioning Total Cumulative Loan Origination per Apr’20:
Crowdfunding Equity IDR 106,06 Trillion
Wealth Management
(YoY Growth of 186.54%)
Analytics & AI
Total Lenders:
Insurance 647,993
34%
Others
Total Borrowers:
24,770,305
Total Borrowers as Companies:
3,467,843

Source: Indonesia Fintech Landscape Report, 2018 Copyright © 2019 | PT Investree Radhika Jaya
OJK Fintech Lending Report April 2020
2 The Role of Fintech Lending
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 Impact of Fintech Lending

Enabling coverage to towards underserved markets that results in

an end-to-end impact towards society

Raw Materials… Processing… …to End Users

Saefuddin Ratna Dian

(Farmer) (Shop Owner) (University Student)
Fintech lending has helped him to Fintech lending has helped her to Fintech lending has enabled her to
expand his land ownership and to obtain working capital to start a afford her university tuition and to
obtain farmer training small business obtain her Bachelor degree

Source: PwC Copyright © 2019 | PT Investree Radhika Jaya

 Co-Founder & Advisors

Our Background
 Launched in May 2016
 Registered OJK in May 2017
 Full OJK Licensed in May 2019
 Senior team’s average 15 yrs banking
Adrian Gunadi DR. Amiruddin Muliaman D. Hadad Phd Azharuddin Lathif, M.Ag, MH know-how combined with innovative tech
Co-Founder & CEO Co-Founder Senior Advisor Technical Advisor Sharia Business  210 full-time employees
Senior Management Team Our Footprint
 Jabodetabek, Semarang , Surabaya, Thailand,
Philippines

Salman Baharuddin Amalia Safitri Dickie Widjaja Andy Andreas

Chief of Sales Chief Risk Officer Chief Information Officer Chief Product Officer

Our Investors – Series C

Closed Series – C round closed in April 20 growth
capital to support expansion plans
Ariyo Putro Astranivari Daniel Armanto Liliana Susanti
Chief of Human Capital Chief Marketing Officer Chief Technology Officer Chief Finance Officer Copyright © 2019 | PT Investree Radhika Jaya
The Business Model
A B2B Marketplace Lending Platform for SMEs
Loan Agreement

Loan Investment Revenue Model:

• Market Place Fees: 2.5-5% of loan
amount paid by borrower
• Lender Fees: 0.5–2% p.a of funding
Loan evaluation amount paid by institutional lender
Loan Application
and selection
Institutional Lenders

Platform Fees Platform Fees

Investree is a pure marketplace.

It matches borrowers and
SME Borrower Investree Lending Platform lenders through its platform and
Private Lenders
does not fund any loans itself

Loan Repayment

Interest Payment

1 2 3 4

Matching Borrower Due Dilligence Using Administer Loan Process Safety & Security by
and Lender Robust Credit Risk Analysis Legal Agreements, repayment and monitoring Specialized Credit Insurance facility 12
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Risk Scoring Model
Using Traditional and Non-traditional Data
Traditional Data Non - Traditional Data

Accounting Payment
Borrowers Credit Bureau AML-AT E-commerce Procurement
Software Gateway

Proprietary risk scoring engine

Internal
Disbursement Data
Scoring Models Rule Based Engine

Loan Grading Decision

Engine

Risk Based Pricing Machine Learning Monitoring & Control

13
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Our Product Offering
Focus on SME – Leverage on Value Chain Proposition
Sub
Average Ticket
Product Differentiator from Anchor Type of
Product Size *
(Structural Main Product Partner Borrower
(in IDR)
Our Focus Diff. Only)
Invoice Single Main product Yes/No PT/CV
• B2B acquisition model thru value chain Financing Line Facility Given to Corp. Yes/No PT/CV
partnerships with anchor partners Pre Invoice/PO LTV lower IDR 656 mio
• Closed loop ecosystem with partners to Financing
build secured financing model with
better credit scoring
Buyer Single Finance buyer’s for Yes PT/CV/Individual
Financing Line Facility inventory IDR 1,267 mio
Merchant Cash Advance (MCA)
Working Regular Term Main product – Open No PT/CV
• Working with Payment Gateway Capital Term Loan Working Capital
partners to offer financing for their Loan
merchants by integrating with their MCA through Structural with secured Yes/No PT/CV
historical data for credit assessment Payment repayment
IDR 650 mio
• We also integrate with other SME Gateway
ecosystem such as cloud accounting, Yes/No PT/CV
logistics, etc to offer financing access Contract based Can be PO/Contract
to their SME merchants loan, pre invoice
Online Seller None None Yes Individual
Finance Historical data based
working capital loans to IDR 38 mio
sellers on e-commerce
* Based on average loan size in May 2020
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Unique Product Offering
Bank vs Fintech Lending to MSMEs
Banks Fintech Lending
Type of Products Working capital & kredit investasi Working capital only

Duration of Loan Short and long (2+ years) Short (<2 years)
Products

Target Customers Bankable & credit-worthy MSMEs clients with Rely heavily more on cash-flows assessment &
collaterals, typically more established beyond business viability of clients since no collateral, and
2 years establishment need for risks mitigations
Target Sector Large corporations, commercials, MSMEs MSMEs

Regulations Since deposit taking, highly regulated Pure platform, no deposit taking, less regulated

Operational Strengths Rely still more on offline distribution channel,
bricks and mortars branches, large physical
networks, transactions via legacy banking
system
Data driven traditional & non-traditional credit
assessment, speed & simplicity of process using
technology
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3 Challenges and Opportunities
for Fintech Lending
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 Future of Fintech
5 Trends that will Shape the Industry

Conducive Environment
Trends around digital customers, new technologies, regulation and general market environment
offer good conditions for FinTechs

Maturation of FinTechs
Most of the FinTechs are very young, confident and focused on parts of the value chain – many
solutions are not yet disruptive and their success is yet to be proven in the market

Increasing Regulatory Control

FintTechs partially profit from a smaller regulatory burden and the established companies’ “legacy
burden” – but this might change and cause a shakeout

Collaboration and Pressure

In the medium term additional pressure will come from tech giants with FinTechs seeking
cooperation with bankers/insurers – a potential win-win situation

Need for Digitization by Incumbents

Banks and insurance companies need to be open to new solutions and learn from FinTech’s working
methods – However, they must manage their digitization largely by themselves

Source: Roland Berger Copyright © 2019 | PT Investree Radhika Jaya

Collaboration Between Bank and Fintech
More Than Channeling
Connect with FinTechs
Innovation lab
Physical space that allows
for collaboration with
entrepreneurs and
professionals of the financial
sector
Fintech as a customer
Provide fintechs the necessary
products/services they need to
operate effectively e.g. cash
management
Fintech as a service
Fintech can help banks with
their technology such as credit
scoring engine or even full-
fledged white-labeling
Channeling thru FinTech
Channeling
Low cost of acquisition of
customers (CAS) strategy
by using Fintech as
origination partners
Fulfill the MSMEs target of
20% and/or accelerate the
MSMEs portfolios
Invest in FinTechs
Direct investment
Investment in FinTech
companies by direct investment
of the financial institution or
holding company in the startup
Investment in
specialized VC
Investment in FinTech
companies thru Venture
Capital set up by the financial
institution e.g. Mandiri
Capital, Central Capital
Ventura
Copyright © 2019 | PT Investree Radhika Jaya
Our End-to-End Suite of Services
From Financing to Business Solutions
SMEs are long underserved by incumbent financial providers, have new options as FinTech propositions grow, not only for financing but also to provide business
solution. Globally, FinTech adoption rate among SMEs is 25%, leaving plenty of room for growth, opening up new ways to provide innovative SME solutions

Investree to become not only loan providers but also an ecosystem to support SMEs business activities in a one stop platform solution

Our Core Other Suite of Services

SME SME SME
SME Loans
E-Procurement Credit Scoring E-Invoicing

• Providing SMEs access to
productive loans that are
typically not granted by banks
• Providing institutional lenders
an alternative process to
channel SME loans and retail
lenders an alternative option
to lend
• Mbiz, Indonesia’s leading e-
procurement platform with top
multi-national customers and
over 1,000 B2B vendors
• Improves the ease of doing
business for both B2B
customers and vendors through
the digitization of the
procurement process
• Direct access to financing
through the integration with
Investree’s SME loans
• AI-based SME credit scoring
that utilizes machine learning
and leverages Investree’s
expertise
• Improves internal credit scoring
processes
• Can be provided to external
parties as an ancillary credit
scoring service
• Billtree, an e-invoicing solution
for SMEs
• Enables access to both sides of
the supply chain by leveraging
transactional data
• Direct access to financing
through the integration with
Investree’s SME loans
19
Evolving from traditional P2P to B2B Ecosystem
From financing to collaborating with strategic partners

Loan Channeling Supply Chain Financing Partnership

 Collaboration with Banks and other financial
institutions for loan channeling
Top Institutional Lender
 Accessing large supply chain by tapping the
Payors with Supply Chain Financing
 Leverage partners’ ecosystem for access to
data and better credit scoring
Top Payors
 Strategic partnerships with top e-commerce
platforms to tap into online sellers
 Tap into both on-line and off-line payment
gateways
 Partner into logistic merchants
 Tap into accounting software to finance the
SME merchant

Government Strategic Partner

Banks Entity
e-Commerce

State
Owned Payment
Entity Gateway
Non Banks
Accounting
Private Software
International Entity
Lenders Logistic

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Investree Case Study: Financing Payment Gateway
Alternative Solution for Ecosystem Online

Payment Agents Merchants Online Consumers

Via Facebook, Instagram, Website, Ecommerce

Working together with Investree on

supporting financing access to merchant

Getting access to alternative financing

solutions to support;

+ Working Capital needs

+ Business Expansion
+ Buy Inventory
+ Preparation for Festive Season

Provides working-capital term loan

Target Market:
where calculation and analysis will be
based on merchant’s vintage data in 1. Online Merchant who are selling to retail via
Payment Gateway online platform (social
media/website/ecommerce)
2. Marketplace/e-procurement
3. Any online/digital biz with aggregators

Copyright © 2019 | PT Investree Radhika Jaya

How Investree Response The Current Situation
During and Post Covid-19

1 2 3 Macro & Micro economy impact to

Series C Funding Stress Test Development
selected Industries

In early April, Investree obtains capital Develop Stress testing and defining the Keep monitoring the recent development on
injection from Series C funding, meaning we trigger that may affecting our Portfolio and the macro and micro economy condition
have a solid financial runaway, enabling us keep sharpening the model based on recent within Indonesia and global as well as the
to tackle the current conditions economy as well as pandemic condition ongoing impact to selected industries

4 5 6
Adjust Risk Selection Criteria Rule Based Policy Calibration Work From Home (WFH)

Adjustment of risk selection criteria for each
grading, high maintenance cost allocation to
loans with impacted industry based on
macro adverse trend
Develop Rule based policy based on stress
test condition, for example Mild (NPL <
2.5%), Medium (NPL >2.5 – 6.5%) Severe
(NPL >6.5%) that covered both for
acquisition and maintenance plan
Investree implement full WFH operation in
compliance to government regulations
to support our employee wellness, and
implementing daily check points online
to ensure work progress

Copyright 2019 | PT Investree Radhika Jaya CONFIDENTIAL

Investree Remains Strong Amidst the Current
Covid-19 Situation
Investree Institutional Lender Vs. Retail Lender

Cumulative Loan Origination 2020 (in IDR Bio) 72% Increase of Retail Lender in May 20

59%
54%
46%
In April-May Investree still have 41%
strong growth in loan origination Institutional Lender
28% Retail Lender

Mar-2020 Apr-2020 May-2020

Delinquency Rates TKB 90 Mar– May 2020

Deliquency rate for TKB90

still remains bellow 1%

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Copyright © 2019 | PT Investree Radhika Jaya