“We would like to see PayFazz as the Google Play of financial services for rural people. That’s how we evolved from the bill payment agent network to finally become the go-to agents for every financial service.”

Fazz Financial Group CEO Hendra Kwik

Leading the “Google Play” of fintech apps for Indonesia’s rural economy with Payfazz CEO and co-founder Hendra Kwik

“We would like to see PayFazz as the Google Play of financial services for rural people. That’s how we evolved from the bill payment agent network to finally become the go-to agents for every financial service.”

About the episode

In our 20th episode and season finale, we called the inspirational and unstoppable Hendra Kwik, CEO and co-founder of Indonesian fintech company Payfazz. Fresh off their Series B round led by B Capital and Insignia Ventures Partners, and as the company closes in on profitability, Hendra shares his story, from growing up in rural Indonesia to building what he calls the Google Play for fintech apps in Indonesia’s rural economy. He also gives his take on Indonesia’s “banking the unbanked” trajectory, heartwarming stories of Payfazz users, and leadership advice for founders.


00:28 Yinglan’s intro of Hendra and how they met;

02:15 Personal experiences that motivated Hendra to start Payfazz;

06:24 Indonesia’s fintech space in 2016 and how Payfazz built their agent network;

08:45 Hendra’s learnings from the YC experience;

10:38 Indonesia’s “banking the unbanked” trajectory;

13:12 Thought process behind Payfazz’s trajectory from bill payments to fintech ecosystem;

16:08 Stories of Payfazz’s impact on its agents and users;

21:16 Culture-building in Payfazz;

25:50 Hendra’s advice for founders;

27:40 Fast Talk corner with Hendra’s favorites;

About Hendra Kwik

Hendra, together with his co-Founders Jefriyanto and Ricky, were most recently featured in the Forbes 30 Under 30 Asia 2019 list. Payfazz is also the first Indonesian startup to graduate from the Y Combinator program and were also recently part of YC’s “Top 100 companies of all time” list. Last year the company was also named as the one of “Indonesia’s best company to work for in Asia.” They were also recipients of the Singapore Venture Capital and Private Equity Association’s 2019 “Deal of the Year” along with Insignia Ventures Partners.
Prior to starting Payfazz, Hendra was the Head of Growth at Kudo (acquired by Grab), where he engineered the growth of the company’s offline-to-online agent network. Hendra holds a bachelor’s degree in Chemical Engineering from Institute Teknologi Bandung (ITB), one of the most prestigious universities in Indonesia, where he was awarded the University Most Outstanding Student and graduated as a valedictorian in 2012.


Yinglan: Today I’d like to trace the story of Payfazz with you, starting with the beginning. What we’ve found in founders is that usually you’re trying to solve your own problems first and it turns out that several million people have the same problem. So I think the same goes for you, who returned your roots in rural Indonesia building Payfazz. So Hendra, take us through why you started Payfazz and your personal journey in the rural economy. 

Hendra: Yeah, thanks Yinglan. I think definitely one of the reasons why I decided to return to Indonesia after working abroad is that I want to do something that can bring impact to my hometown. So I was a bit different from the typical founders that you see. So I grew up not in Jakarta. I grew up in a small hometown called Jambi.

So Jambi is the typical rural country that you will see in the second or third-tier areas of Indonesia. So I grew up, from a middle-class family there. I spent all my childhood there. During my study in Bandung, which is nearby Jakarta, I see that there are very different opportunities that you see between the first tier city and the second-tier city. 

I also remember that my parents never really had financial planning, like what I see from my friends in the bigger cities. So I remember there are three things that remind me why I  keep doing the mission of Payfazz. 

I think the first comes from my parents’ small merchant [store] in Jambi. So my parents selling this Muslim clothes offline. And then, I remember since I was a kid, I always go to the store with my parents, but I see that the store 20 years ago, or even 30 years ago when I was a kid it’s not changing a lot after I was 20 years old. One of the reasons is that my dad has never had the knowledge that he actually can expand his store by getting capital access. So, first of all, I understand that there are so many small businesses that will never grow to the maximum potential because they never get support or capital access. 

And the second part is that when I want to go to study in the ITB, one of the best technical universities, before I applied for ITB, actually, my parents don’t think that I can be smart enough to enter the university. They said that I have to try the private university, otherwise, I will waste my future. And then when I went to the private university, I applied for the scholarship but I was not accepted. And then my parents don’t have enough money and they also don’t foresee this failure. And actually, my mother was thinking about selling her gold wedding ring, right, to finance my study. That made me feel so bad. And that also opened my eyes that a lot of people, middle-class families in Jambi don’t really plan education for the kids. They don’t have money to finance their studies. And I also don’t want the wedding gold to be sold. So I reapplied to ITB. And then finally I was accepted with a full scholarship, so it was a blessing in disguise. 

And the last part is that when I just graduated from university, my mom got cancer and the operation cost was so expensive. And then again, we fell into another trap that we don’t have enough money to cover the operation costs. So my brother is also just starting working in the bank with some manager level. The salary is not so high. I just graduated from ITB and I don’t have money as well. 

So, you know, like the three moments of my life make me realize that financial access, as simple as capital, education savings, and health savings plan is very important. If it happens to my family, there are millions of other families in rural areas of Indonesia and I cannot imagine if all these kids lose their future because they don’t have education savings, all the sons and daughters have to see their mother don’t have money to cover the health costs. And many small businesses cannot grow to the maximum potential because of limited financial access.

And I want to bring the change for that. That’s why I decided that after spending four years across the United States, South America, and also the Middle East, having some exposure to technology work, I decided to go back to Indonesia. And I wanted to do something to change that with technology and that’s how Payfazz started.

Yinglan: I think it’s a very powerful story Hendra. how you felt the pain point from your journey and then you try to solve the problem. So now I think Payfazz has grown to provide financial services through a network of agents, what we call warungs in rural Indonesia. What was the financial landscape in rural Indonesia like back in 2016 when you first started and how did you decide to take this agent-driven mobile-first approach?

Hendra: I remember in 2016, I just went back from Brazil to Indonesia. And at that point in time, I got some offers to work. And then one of the startups that was really interesting for me is the startup that works in the rural areas. I got offers from some big companies,  unicorns, consulting companies, but I decided to join Kudo specifically because they tackle rural areas.

So I was responsible to lead the growth of the company. And because of that, I go a lot to the rural areas. And then I was trying to sell this ecommerce product, but surprisingly, instead of using the ecommerce product, they asked me to build something else. They asked me to build the way for them to get financial services.

And then when I deep dive into what happened on the ground, I realized that it’s very hard for people to do financial service or payment. At that point in time, we haven’t seen GoPay or Ovo and we see that there are very limited bank branches in the rural areas.

And there’s a huge unmet demand for this population to get easy access either to pay their bills, pay ecommerce, send money, or even get some capital for their business. That’s how I see that there’s a huge demand. And then as much as this population own a smartphone they are not that tech literate. And secondly, they are also not financially literate. So when we tried to offer them services, teaching them about how to use it for the first time is difficult and then we see that we need to have some agent who helps to educate [them about] financial literacy and how to use the fintech products in their life.

One of the things that we also observed is that in rural areas, we also see these common warungs and kirana stores everywhere. And most of these rural populations really believe in these kirana stores and they interact a lot then I saw that there’s a sweet spot to turn these kirana stores into agents to help this population understand and use financial service.

So I turned them into agents and created this as a way to reach the users across Indonesia. And then the user gets access from the agents and then it’s become the supply and demand for the platform. So that’s when we decided to take this approach.

Yinglan: I think this has been a great journey and I mentioned earlier, you know, I think you were the first Indonesian startup to enter YC, and obviously there’s been many more Indonesian companies since then but you were the trailblazer. What was one of the learning, some of the learnings that you took away from the YC experience? And how do you apply it to Payfazz?

Hendra: I think one of the most powerful things that I learned from YC is about how they teach us to understand the customers because in a market like Indonesia, especially in the rural areas, it is the market that is relatively new to tackle. And the behavior is very different from the existing players in the Indonesian digital economy at that point of time. There are a lot of new behaviors that we need to understand. And then there are some frameworks that YC has given to us. We learned directly from the people who have experienced building some new economy like Airbnb or Dropbox and how they evolve some small pain points into something that is useful for a lot of users. There’s a lot of frameworks. So. I learned these frameworks at my time in YC. That’s the first case. 

The second case is also like before Payfazz I actually don’t have that many experiences about fundraising. So YC taught me about how to understand the basic fundraising and help us to finally meet with Insignia and several other investors and navigate this complicated process in the first place. 

And the last part, of course, in YC, we also see some other fintech [companies] that are much bigger than us. We try to get some insight into how we should develop FinTech products using the advanced technologies and advanced product development from Silicon Valley, but apply it to the local knowledge. So it’s like having the hybrid between the global knowledge versus the local market understanding that in turn creates something very powerful in Indonesian rural markets.

Yinglan: That’s a very powerful combination. We call it “glocal” right? Global knowledge and local implementation. And now I think banking the unbanked is a global phenomenon right across the world, in Kenya, Brazil, India. How do you think Indonesia stacks up compared to these other markets in terms of banking the unbanked. Any advantages or disadvantages that Indonesia has as a market for the adoption of these services?

Hendra: Yeah, when we see Indonesia versus other countries, I think that, first of all, Indonesia has a very huge growth opportunity because the digital economy has just started and it is growing exponentially because the population is very young. There’s a lot of young population that is tech-savvy and the penetration of internet and smartphone is also increasing. So Indonesia itself is very exciting for the digital revolution. 

And the second part that makes it even more interesting is that the amount of unbanked is one of the highest, in the world because Indonesia itself has a high population, compared to, let’s say, if you look at the United States and China, they also have a high population, but pretty much almost majority of the population is already bankable because they already use some sort of digital payment or they already opened some bank account. But Indonesia itself represents a huge population where the percentage of unbanked is very high. 

And the last part is that the tech-savviness from Indonesian customers is still low. So there’s a huge opportunity for you to educate them and become the first financial service for them. And then you grow with them and evolve with them to provide a more complete set of financial services.

When I compare with the development let’s say in China or in the US and in India, right? They are pretty much more developed in terms of technology infrastructure. For example, in China, we see WeChat Pay and Alipay. With the US, you see PayPal, Stripe. So they are very sophisticated. In India, we just recently saw a revolution because we see that Narendra Modi, the prime minister sort of like doing a demonetization strategy and they also launched a product called UPI that transformed the whole Indian landscape. 

We haven’t seen that in Indonesia and I expect that this will happen soon. And we’ve seen the central bank actively pushing towards that with the launch of a national QR system called QRIS. They also consistently advocate the transition of the payment into epayment as well as the transition of banks into digital banks. And I think this revolution will happen in the next couple of years.

That’s why we are really serious on positioning ourselves towards this unbanked, and focusing on developing the technology, to make sure that we are not missing the momentum like what happened in India or even China.

Yinglan: I think there’s a very accurate trend and, I would also want to retrace the progress of Payfazz, so I think it started off with some of the basic services for agents, but I think it has now become this massive ecosystem of various financial services, apps, ranging from bill payment to loans to offline merchant payments. Can you walk us through the thought process and the evolution behind this trajectory, for the rural community?

Hendra: When we started the company, we know that one of the reasons why there are so many unbanked in this place is because there is no effective distribution channel. So the first step that we do is to find the most effective method to distribute things in rural areas. According to history, we’ve seen that kirana stores are the most effective tools for consumer goods or telco to distribute their products to this huge rural population, hundreds of millions of people. And as we see that the kirana store or warung is the most effective one, we try to onboard all of them to our platform and then, as soon as we get the warung on our platform we use them to distribute products, right? In this case, for example, we provide things like bill payment that is already familiar to the customer. And when the customer interacts a lot with the PayFazz agent to access bill payment, this kind of interaction can be used as a baseline to create a platform.

So if Google was started as the place for people to search, right? So they started as an information search [service] then they cross-sell to also help people to search for video through YouTube. And then they also help people to search for apps through Google Play Store and Android. So we envisioned Payfazz to start as a bill payment agent network and as soon as we have a very strong distribution and scale across the country — almost a quarter-million agents serving almost 10 million users. And I think that is a very powerful number of users — then we decided to turn PayFazz into the Google Play for financial services.

We want that brand reputation that whenever the rural people want to get financial services, be it bill payments, savings, account lending, or even investment, they just go to our agents which has some Payfazz logo on it. Then they can ask the agents and then the agents with the mobile application that they have on their hand will help this user to get the financial service. 

Like the people in the city always think that whenever I have to find apps, I will have to go to Google play. We would like to see PayFazz as the Google play of financial service for the rural people. So that’s how we evolve from the bill payment agent network to finally become like the go-to agents for every financial service. 

To achieve that mission, we do several methods. First, we partner with many financial services providers in the country. We also have some internal license where we create some customized financial service product that is tailored to this unbanked rural market. 

Yinglan: I think the nice analogy is that you have started to build up what is called a Google Play for fintech apps in Indonesia.” This approach has proven to be a pretty impactful one for Indonesia’s rural economy. I would love for you to share a story or an example of how PayFazz has bridged financial access and empower some of its agents. We heard many interesting stories of how you have changed the livelihood of agents and some of your users. So love for you to share a story. 

Hendra: Yeah. One of the examples is that warungs or kirana stores in Indonesia, they always spend, I will say like, twelve hours or even more than twelve hours of their time taking care of their kirana store. So they wake up at 8:00 AM. They are very hardworking and they are very dedicated, right. They start working from 8:00 AM and then they’re going to close the shop at 8:00 PM or 9:00 PM. So we see that these people are very amazing. They are very dedicated. They are trustworthy. And they are loved by their communities. 

So one of the first things that we do is to empower this agent about how to help them make more money and how to help them do their business easier. And Payfazz’s value proposition firstly was focused on helping these warungs and we are providing them with some features, like a feature to help them manage their stores, like the cashier front, the printer for the receipt, incorporated into Payfazz application. And as soon as we see them engaging more, we also provide them with a way to make more money. Such as becoming bill payment agents, or even providing them with capital access. And as we see them engaging more and more, then we come up with the model where we try to turn them into the “Google Play for FinTech apps” for their communities, which is the rural unbanked. 

The way we do it is that we create the banking agency features or financial service agency feature inside that agent application. So initially the application is used to empower the agents to sell more to their customers. Then we turn this into the platform for financial service agency, where this financial service agency feature is the key to bridging the financial service access from the financial services provider which is mostly headquartered in Jakarta and hundreds of millions of people, who are mostly living outside Jakarta. 

And then the way we do it is that we digitalize the whole financial service process, which is typically being done offline. If you remember before the era of smartphones, many people have, whenever you want to do a credit for your house or car, when you want to open a savings account, you need to go to the branch and you fill all the paper. Right? 

So we digitalize the whole process. We replace all the paper with the digital form. We try to change all of the processes into digital. And then all these digital processes were embedded into the Payfazz application. So instead of being done in the branch of the financial service provider, now, the customers can just go to the agents and they tell the agents about what they need. Then if the customers have a smartphone or even if they don’t have a smartphone, the agent will help them to fill in the data. Right. 

I’ll give you one example of how impactful it is. We have an agent in one of the very rural village. So in this village, there is one small seller of cake. This mother reminded me of my mother, I think 40, almost 50 years old. She was selling cake in the corner of like several neighborhood houses. And this cake seller already knows about Payfazz, because she sold cakes there, and then she had her house so sometimes you need to pay for electricity. She would go to the Payfazz agent and then sometimes she wants to call her daughter or her son, so she needs a phone credit, right, so she buys phone credit through Payfazz agents. So she knew about Payfazz, but at that point in time, we hadn’t introduced the financial services product, like capital access.

So when we start to bridge the financial access through our financial service agency feature, then the agents offered the mother who sells the cakes to get the chance to get access to capital. And then the mother is definitely very happy because she’s been selling the cake for 10 years.

She didn’t own any shop and she always wanted to get like three million IDR or four million IDR, which is just 300 USD to build her own shop so that she can grow her business. As soon as she applied through the agents and then we saw that actually this candidate is a very good business, small business owner. She has a good vision for her business and we feel like she has a good character to get this capital. Then we approve the capital application. And then we disburse the capital directly to the mother’s bank account. And then suddenly the mother now owns a store. The income from the cake business grew up almost 2-3x and then she has repaid her capital. Now the business is growing much better than ever. And this kind of support for the small business will not happen if Payfazz agents are not there. 

For the last 10 years, it never happens, despite the fact that there are so many banks in Indonesia. No one really catered that up to the needs of the small businesses. And then by having Payfazz agents and the financial service agency model to bridge financial access, we see that the empowerment doesn’t stop at the agent, but it also goes towards the communities around the agents, be it the unbanked people, the small business, or the informal business around. 

So that’s what excites us the most. What keeps us excited every day we wake up, like whenever we do things, it’s not just for the pure company growth or the profit, but we also see that a lot of social impact is being transmitted to the rural areas where we operate. That’s what keeps us going, despite all the difficulties and the hurdles that we face.

Yinglan: That’s a great story, some great examples there. And I had the great fortune of having done a town hall at Payfazz, and I was very impressed by the culture. Having rapidly grown Payfazz since it started, how would you describe company culture and how have you been managing the growth of the company?

Hendra: Yeah. I think for the company culture and growth, it’s something that you always need to tackle together. If growth is fast, the company culture also has to be adapted really fast, according to the growth.  

One of the most important things to make sure that there’s good culture is that you have to remind the people about why we build Payfazz in the first place. And of course, I know that all of my team in Payfazz have mothers. All of them have parents. All of them also can understand about small businesses that they see in their surroundings, the small businesses fighting for their families.  Of course, in the journey of building the difficult things, or even building the big things, there are always times when people will be demotivated, right. Where the morale will be crushed by the difficulties that you face within the company. 

And then one of the ways for me to motivate the employees is that I always tell them, just remember that you are doing this for millions of mothers. If you love your mother and you want to help the other mothers in the country, we need to fight to do this. So I always put the sense of mission and help my people to relate with the mission, just like what I feel with my mother, what I feel in my parents and their families, what I feel like in my hometown. And then that’s always helped me to bounce back whenever I have difficulties. And I think it’s quite good so far to help us make sure that people are doing this correctly and they are passionate to do this every day. 

And the second part, of course, like I personally, have a very strong growth mindset. And one of the things that I would like to see in the people in our organization is the mindset that people always want to grow. And I always tell them my personal experience that you know, like before I was in my position today, I was a kid from a small hometown. And the fact that I was rejected from the scholarship in the private university. And then it almost destroyed my future because I cannot study because there’s no money on the table and I managed to get to ITB. And then, you know, I graduated as the best student. And then I cracked it to the United States? I learned about tech and then I started Payfazz. 

A lot of this is possible only because we have a strong will to grow ourselves. So in Payfazz, we always make sure that whoever is inside the company always needs to grow, for example, maybe you start as a marketing associate. There’s one of my team members who started as a marketing associate. Then she grew up all the way to marketing manager, managing like 30, 40 people. And I think that’s amazing. That’s the culture that I want to see in people. 

Those are the two core things I always remind people that we always need to know why we do this, our mission. And secondly, we need to always grow ourselves so that we can grow our mission to the bigger communities. Maybe not only Indonesia, one day in Southeast Asia. 

And the last part, of course, we always try to make sure that the culture is easily being understood. We have this culture that we call it STEP, S-T-E-P. So whenever the people are joining our company, we always tell them, take your first STEP. So STEP constitutes “S”, which is “Start small,” “T” which is “take the lead,” “E” which is “Eager to grow” and “P” is “Pro-customer.” So it encompasses all the value that we want to see. It can be related by the people. And so far it’s good. 

And I feel like one of the other important culture that we also bring is that the people have to always think that all the people around you are your family. So in a sense, like when you want to achieve something big, you cannot just move alone. You always need to involve your team like the football team. You have to have the goalkeeper, you have the striker and you have to have the midfielder in the back. 

Because sometimes we also see that, you know, the business people can always think that I can grow really fast, you know, I need the tech to do this quickly. And then the tech always thinks that I will have this idealism, that I want to do the tech perfectly, ” Without this perfect tech, the business guy will not achieve hypergrowth.” And the business guy always thinks, “Even if you have good tech, if you don’t have a good growth hack, we can’t grow faster.” 

So I was trying to avoid this kind of like people moving into their own direction by building this teamwork and family culture, like the football team. So far, even though with all the weakness, we see that this kind of help us to make sure that everyone is aligned towards our direction. With our fast growth every year, we see that this culture has been helpful for us. 

And then I think it’s very important for all the founders to make sure that they have something like this in place. Otherwise, it’s very easy to get everyone to misalign and forget why they do this in the first place. And then when things go south, without this thing in place everything will break apart and we don’t want that to happen.  

Yinglan: Fantastic man. I think this is great. Very proud of your accomplishments and with what you have accomplished so far, I think many startup founders in Indonesia look up to you and your co-founders. What’s one piece of advice you would share to founders, who are listening to the podcast today?

Hendra: Yeah. Basically I would say that there’s one quote that I always put in my life is that I will say that “nothing is impossible”. Nothing is impossible, but we need to focus on ourselves and want to give extra effort on that. So if I look at I think a lot of founders when they start the company you always think that it’s impossible to do, there are always those difficulties along the journey, even you heard my story, right? I can never imagine I would be in this position today, from the village in Jambi like, there’s a very long story, like how can I go to ITB? And then how can I work abroad? And then how can I go to YC? How can I meet Insignia and how can I meet the other investors along my way? It’s something that I can never imagine before, right. 

But because I believe that nothing is impossible and I think that’s also applicable for Elon Musk, like who thought that Elon will be successful in building a rocket? Everyone will say that it’s impossible. Also for Jack Ma, he was rejected by even KFC. And then he built something like Alibaba. So, because I feel like the mindset that nothing is impossible of course, also needs to be coupled with our mission, why we start the company in the first place will help us going through all the hardships especially during this COVID time, right?

I think a lot of people, we feel like, “Oh, I think this is the end, this is so hard for me,” but I would like to shout out to all the founders that maybe we think that this is impossible today, but I think if we still focus on ourselves, tried to survive, you know, focus on why we start this in the first place, as well as, keep consistently putting the hard work and the effort, despite all the signal always tell us that it seems impossible and you should stop, please neglect all these things. And then still think that nothing is impossible as long as we always focus ourselves and put in the best work to make it happen. So I think that will be one piece of advice from me to all the founders.

Favorite Book on Entrepreneurship: The Hard Thing about Hard Things by Ben Horowitz

Favorite TV show/movie for entrepreneurs: Steve Jobs biopic

Favorite app or tool to use right now: Spotify and Instagram

Favorite place to go to in Southeast Asia: Bali or Brazil

Fellow founder he would want to hear on the show: Forrest Li, founder of Shopee and Garena 

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