The story of Fazz Financial Group is also a story of banking and fintech’s evolution in Indonesia.

What started out as a B2C payments network for rural Indonesia built on app-enabled warungs in 2016, has since become a global fintech group with four businesses:

• “PayFazz” neobank for small medium shops in Indonesia
• “BillFazz” neobank for enterprises in Indonesia,
• “Fazza” neobank for consumers/retails in Indonesia
• “StraitsX” for stablecoin issuance and stablecoin neobank globally beyond Indonesia

From a pioneering startup that predated emoney licensing in the market, the company has since developed not only its product ecosystem and synergies, but critically its set of licenses that include remittances, P2P lending, banking aggregation, multi-finance, electronic money, QRIS, and payment gateway

Both its product and license journey reflect the broader development of Indonesia fintech from payments to banking, from money movement licensing to emoney lending licenses

We’ve had the privilege of being partnered with Hendra and his co-founders from the early days in 2017, going through Y Combinator, scaling their network to more than 200,000 warungs, joining forces with Xfers to become a global fintech group, and professionalizing its businesses, attracting the partnership of institutions globally including likes of MUFG through Bank Danamon and MUIP.

MUFG Innovation Parnters (MUIP) recently released an interview with Hendra on the Fazz story.

You can also watch our coverage of this story in our Against All Odds series:

Transcript

This was going to be a big game

Hendra: I always had an unfortunate situation. I think my parents doesn’t have a lot of money to send me to school, and I imagine if I become another cashflow disruption, maybe this going to shake the family. Then I think the moment of change happens when at the end of the day I play basketball.

I know that. Basketball doesn’t earn me money. So I was thinking that I need to find something that is creating less burden. And then my mom said, you don’t need to worry. You just sell my wedding gold so that you can have a future. You study, you have a future. And it strike my heart because I play basketball.

I’m gonna sell the most beautiful possession of my mom. And then this sort of changed the way I think about it. The last semester I was committing. Okay, I’m not gonna let my mom down, so I’m gonna try to find whatever I can do to change the situation. It’s the same in building a startup.

Fast forward several years, I was trying to get cellphone access in Indonesia because I came from [working in] Brazil. I needed to buy it from a shop, and I paid 100k. At that time, the credit never came to my phone. It seemed like something that was very behind compared to what I saw in Silicon Valley.

So at that time, I saw that paying for a phone recharge was complicated. After that, I also saw that Gojek was still paid with cash, and you still needed to pay with custom delivery. I was thinking that there was a way to bring what we saw in Silicon Valley with PayPal to create a better way to pay for this phone credit and Gojek.

That was the initial idea of PayPal. We started before GoPay even existed. We tried to get customers to use it. People used it to pay for their phone credit. We activated free transfers. But then as we grew, the central bank told us to stop because we didn’t have the e-money license.

To get the e-money license, we needed money, which we didn’t have. One way for us to survive was by serving the merchants, which we call agents today. That’s when we pivoted from consumer-focused payments to agent-focused payments. Of course, even with agent-focused payments, because we also did remittance, we still needed to get the license. We still needed to do some work on that, so we just tried to hustle.

We tried to extract revenue, hoping we could get enough capital to get the license. But then one thing happened that I predicted would happen: Gojek was going to have their payments, like PayPal. Tokopedia was going to have their payments like PayPal, which initiated the creation of GoPay and OVO.

At that time, we were still starting credit in Tokopedia and Bukalapak, and they started to lock us out. They started to launch their own credit payment. That’s when I realized that this was going to be a big game, and I needed some help from investors. We applied to Y Combinator and we got invited. But I had no idea how to get the visa to the US or how to do the interview. I just tried to find a close Y Combinator startup.

This is the guy

Tianwei: For some reason that day and morning, I turned on the computer. I was getting ready to work on something. I saw this email that this Hendra guy from Indonesia was asking for some help. And I just replied. I said, “Sure, where should I meet you up and how can I help?” And then very soon he tells me that he’s trying to come to Singapore to fundraise. This was his first time coming to Singapore. We were very frugal founders, and that’s I think, where we bonded. It was like saying, “Hey, don’t stay at a hotel, man, just stay at my office.”

I think over that two weeks, we were helping him out on how to fundraise, how to pitch to investors. I was running around in Singapore, like I was pitching one investor for two weeks. During that two weeks of just therapy sessions or just talking to each other, hanging out, having dinner, he somehow convinced me to put my own money. I became an angel investor in Payfazz. In my youth, we were very poor. That’s why I came back from working for the Valley, and I’ve been unemployed for two years by then, to put out some money to invest in this.

But I really saw something. I feel that the mission and the things that we’re all trying to fix were so similar, and we bonded as founders. I feel that what he’s doing is very meaningful, and it’s a real infrastructure problem that I can’t fix because we are more focused on the API side of things. But I understand that in a real-world context in Southeast Asia, which I grew up in, there is a lot more than just technology, and a lot of people and operational problems that need local knowledge to fix.

And I think he convinced me just over that period of time that this is the guy. This is the guy who’s crazy enough, that shares some crazy dream that we have together, and I want to put a bet on him. So I put in a personal check to make sure that they can survive, but at the same time, we were trying to strategize on which other different investors to talk to.

Hendra: It took two weeks to pitch for just 50k. Then in two hours, we got one and a half million.

Tianwei: Immediately after, without naming an investor, the news goes out and it becomes a frenzy. Everybody wants to invest. Then the next therapy session is, who should we be paying?

We have one shot

Tianwei: Singapore is proper. There’s a lot of compliance and regulation. You need to have a lot of reputation. And we have a bunch of five guys, engineers that have no experience in banking, trying to do that. So it takes time.

A second problem is, again, that we have this big belief that we are coming back to solve real-world problems. My background was in engineering, and I was doing advertising and everything. I really want to solve real-world problems. And when you talk enough with investors, it’s like we should go to where the better problems are, and the real problem is in Indonesia, which I always—that’s why we bonded—realizing that part needs to be solved. I can build all the API and software stuff.

I need to serve the Indonesia side. But I knew no one. I have never traveled to Indonesia before. And I have never been to Jakarta, so the only guy I know from Indonesia is Hendra. So I text him, “Hey dude, I’m coming this week. What do I do? Where do I stay?” I don’t even know how to travel around. And the epic story was that I think the meeting was scheduled on a Friday afternoon, so I was booking a flight on Wednesday.

After I booked a flight on Wednesday, on Thursday there was a bombing in Jakarta, so everyone was freaking out in Singapore, saying that you should not go to Indonesia. My mom, as usual, was freaking out. I was like, “Never mind. Call a friend.” I know one guy, and his reply was like, “I’m eating nasi padang next to the place right now. It’s fine. Just come. I’ll take care of you.”

So when I went to Jakarta, he picked me up and I had that meeting. He helped me with everything from, I’m literally on a bank. He helped me from opening a bank account, the internet account, my phone. The apartment that I rented didn’t have internet, didn’t have water. Anything basic was pretty much handed to me to basically get me on the ground.

A lot of the things that we have done and delivered over the last few years and got about to go live this year are all related to cross-border payment, especially the one that’s coming up with Grab and Ant. How can we allow users in this region to be able to use their native home wallet to be able to seamlessly make payments in other national QR codes when they travel from Singapore to Indonesia or from the Philippines to Singapore itself?

We are very fortunate along the way that we got investments to come in. This is not something that, you know, a kampung kid from Jambi or, for example, a middle-class kid in Singapore easily gets. We really treasure this opportunity. So we feel that there’s a huge responsibility for us to deliver because if we fail, if we didn’t live up to the expectation, the next guy that comes on the scene, the next entrepreneur trying to fix this thing will have an even harder time.

We have one shot a lot of the time, and you can’t fail here. And it’s not just for yourself personally. If you fail, sometimes you have to feel you are failing on behalf of the whole industry.

Everybody has a mom

Hendra: Everybody has a mom. When I said that my mom loved me and wanted to give the wedding gold to me so that I can sell it, turn it into cash, and then pay for my studies so I can change my life. That is relatable to an [Indonesian] worker in Singapore too.

Sending the stablecoin so the kids can study and become a successful woman in their future career. Women and other employees have moms too. They all realize how much their mom loved them and gave them the money so that they could become successful today, working at Fazz and changing the lives of other millions of moms through technology like stablecoin.

Millions of kids receiving the money with a stablecoin. Millions of merchants and agents to earn more money to fight for their family so their family can make their kids more successful. I think all the stories are relatable for the agents, for the people who use the remittance, people who receive the stablecoin from the remittance, the employees, myself, the co-founders. My co-founders also have moms. I think that’s the best way to sell the personal story that you yourself live and is also relatable to other people’s lives.

Continue to Part 2