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The MoneyPot Live: Unlocking Value: How Data Powers the Next Wave of Platform Growth
On the latest episode of The MoneyPot Live at Money20/20 Asia, host Rachel Morrissey sits down with Hans Patuwo, Chief Operating Officer of GoTo Group, the largest digital ecosystem in Indonesia. Discover how GoTo's integrated ecosystem approach drives growth in one of the world's most dynamic digital economies.
Hans reveals the fascinating journey of GoTo Financial, and how the company leverages proprietary ecosystem data to provide financial services to Indonesia's 97 million unbanked citizens. Learn about GoTo's innovative approach to customer acquisition, monetization, and retention in a diverse market spanning 17,000 islands with unique subcultures.
Key topics include:
- The evolution of GoTo Group from mobility services to a broader ecosystem that includes fintech solutions
- How COVID-19 accelerated digital payments and reshaped business priorities
- Strategies for serving unbanked populations with limited credit access
- Data-driven approaches to sustainable lending in emerging markets
- The challenges of designing financial products for diverse user segments
Whether you're interested in fintech innovation, emerging markets, or platform economics, this episode offers valuable insights into how data and local expertise are transforming financial inclusion in Southeast Asia.
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Welcome to the Money Pop. My name is Rachel Morrissey, I am your host today, I am the head of content for the US show and I am the executive producer of the Money Pop podcast. I am here today live at our Asia show and we get to talk to Hans Patuo, who is the Chief Operating Officer of GoToGroup, and we're going to get to a whole bunch of different things about what GoToGroup does and talk about what the difference they're making in what's happening with platforms. So let's start with what is GoToGroup? Talk to me about who they are.
Speaker 2:Sure. So GoToGroup is an Indonesian tech company. We launched our first app in 2015. And thankfully, we have been successful enough and we did a public listing in Indonesia Stock Exchange in 2022. We have two major businesses that we run. One is what we call the on-demand service, so think of it like ride hailing and food delivery. We have a second business unit, which is our FinTech unit, and there we have payments as well as lending.
Speaker 1:So let me ask right off the bat which came first, chicken or the egg? So was the FinTech unit born out of needs from the other unit?
Speaker 2:Absolutely.
Speaker 1:Because as soon as you said it, I was like, oh, they were having issues and they were like we need something that solves problems here way better than what's available on the market, and so you are spot on.
Speaker 2:Let's do this. You are spot on, Rachel. You're spot on.
Speaker 1:So talk to me a little bit about that. What were some of the issues that you're seeing and what inspired the birth of the FinTech unit?
Speaker 2:Sure, so it came in multiple evolutions. The first step is in 2015, when we launched the Ride Hailing and Food Delivery app. It really did well and was quite successful. However, we ran into a major friction point, which is the payment of using cash. Both the service provider, the partners, as well as the customer needed to have specific amounts of cash, and change was a bit of an issue.
Speaker 1:Yeah.
Speaker 2:So back in 2016.
Speaker 1:And riding around with cash. Delivering with cash makes you a target. There you go. So yeah, there you go. Exactly.
Speaker 2:And so it started very benign in 2016. We say we needed to have a payment solution. It was closed loop, like only within the Gojek back then ecosystem, and, to be honest with you, it pretty much remained that way. Along the way we picked up a few, we did some acquihires of a few fintech businesses, like we got a small merchant payment gateway, we got a point of sale system, but really the next major catalyst was the COVID pandemic as it was for so many. Indeed.
Speaker 1:And I don't mean to, I do not mean that flippantly at all. The pandemic, particularly in the payments area, was such an accelerant for contactless payments in so many ways around the globe that it's hard to see how it could be matched. You could see all of these things were lining up for it, but you just didn't see anything about the adoption of it. And then it's funny because I remember COVID. I remember sitting in my apartment and watching a TV commercial where they were advertising a contactless payment and my jaw dropped open because it was a Burger King and I was sitting there going, burger King is advertising we do contactless payments and I thought, okay, my brain, my world has flipped.
Speaker 1:I was like wait, okay, what I do is we're getting way too popular. This is weird. Anyway, I did not mean to interrupt you with that.
Speaker 2:No, no, all good, all good.
Speaker 1:It's all part of that cycle, so I totally get it. So COVID comes and you guys go oh.
Speaker 2:Yes, and you can imagine right when COVID hit, our transportation business went south in a hurry, but other parts of the business, like this Mason payment unit, really really took off. And I think what COVID also did for us was it gave us a bit of time to breathe, because we've always been on the treadmill 2015, 16, 17, 18, always in the treadmill growing, raising funds, growing, raising funds. With the lower amount of economic activity around the COVID period, we started to think and we said wait a minute, wait a minute. Around the COVID period, we started to think and we said wait a minute, wait a minute.
Speaker 2:Payments fintech is a completely different universe to delivering passengers and food Regulations are different, customer expectations are different and this is completely bizarre that we're managing them all as one. So in 2021, we put together all the different pieces that are FinTech related within the group and we created what is now called Goto Financial. So I would say that's the first time in 2021, only a few short years ago that we started to think of FinTech financial inclusion, growth in providing credit services as a standalone business proposition rather than just an enabler, to your point, to increase the conversion rates on our ride-hailing and food delivery businesses.
Speaker 1:Sense. When you say it, I mean obviously for your transportation business people weren't going anywhere but for your delivery businesses. Was COVID also a halt or a breather, or was it an accelerant there as well?
Speaker 2:Yeah, so it was an accelerant. Yeah, not quite to the same level as payments.
Speaker 1:Yeah.
Speaker 2:Yeah.
Speaker 1:Yeah, that makes total sense. So let's talk to us a little bit. Like, gopay became the big unit here, and so what is the difference now? Like, where is GoPay headed? Where are they sitting in the bigger scheme of things? Because obviously they're not there. If they're a whole unit, they're not just an internal use. So who's partnering with you on GoPay? What's your customer base?
Speaker 2:Sure. So okay, when we started to think about the FinTech as an individual unit, individual business, we started to think about who are our customers. And Indonesia is the world's fourth most populous country 270 million. So we've got a lot of people. However, the GDP per capita is still fairly emerging $5,000 GDP per capita and we started to realize that a lot of our ride hailing and our food delivery businesses are probably more useful to the, let's say, middle class and above Middle class and above right, because the mass market would not buy food from the outside. They'll go to the market, cook themselves or they'll just go to the food stall right outside their house to pick something up. So we realized that there were and here's another interesting piece of statistics In Indonesia, in a country of 270 million, the central bank has said that about 97 million of the Indonesians are unbanked 97 million.
Speaker 1:How many in Indonesia? 270. That's like a fourth right.
Speaker 2:Yeah, it's a significant proportion.
Speaker 1:No, that is a significant proportion. I know I was like wait a minute, I'm doing really bad math here, but that sounds like over a quarter of the population.
Speaker 2:Exactly Okay and check this out. Do you know how many people in Indonesia have credit cards?
Speaker 1:I would think very few.
Speaker 2:Indeed. So there are somewhere around 10 plus million, 11, 12 million unique credit card holders. So quickly we begin.
Speaker 1:Like half a percent of the population or something like that.
Speaker 2:Yes.
Speaker 1:Wow. Yes, I mean that's so. It's so antithetical to the where I you know where most of the people I talk to are from. Yeah, I talked to are from right In the West the. West, in the United States and even in Europe, the idea of having low card usage is almost unheard of, right? But I know that that is not the case in most of the global South, and when you hear half a percent, you're like, wow, that's a really low amount of unique card users in a single country. Okay, exactly.
Speaker 2:Talk to me more. So the conclusion was there was a huge market here, but it may not be the same user segment that are using our transportation and food delivery businesses and they needed something different. And there's a reason why they are still unbanked and not have access to credit. There are challenges around data availability, challenges around onboarding, friction, kyc and so on and so forth. So what we did since then is we realized quickly that our existing application for transportation for food is not going to cut it. It's a bit too large, it's a lot of features and, to be honest, not everybody has high-end iPhones right, there's a lot of Android phones out there and we needed a GoPay app in 2023, in mid-year 2023.
Speaker 2:And it's grown very rapidly. We also launched a lending unit, also in 2023.
Speaker 1:Oh, connected to it.
Speaker 2:Yes, connected to it. So now we do consumer lending, small ticket sizes, both BNPL and some cash loans. We do that both within the ecosystem ie to our transportation customers, to our food delivery customers, but with our app we're also now open loop. So we take, so people register, there's a lot of interest, a lot of demand, and the question has been okay, there's a lot of interest, a lot of demand and the question has been okay. There's always been a lot of demand, given the very, very small credit penetration in the country. But how are we able to do this? How are we able to serve them in a way that's financially sustainable, where the rates are not too high and the risk and the losses are also under control? And that's really where we spend a lot of time thinking about that and hence this notion of we have to be. We have proprietary data that we have to leverage.
Speaker 2:Now I think this is not something new. Everybody talks about data, data, data. Our experience with it is that there are three distinct pieces of that journey. The first one is getting the data, and you think about it. For a lending business, the data that you need to be able to take underwriting decisions is critical and there are oftentimes public or third-party sources of such data credit bureaus, etc.
Speaker 2:I think a lot of those services in Indonesia are still fairly nascent and are still developing in capability and sophistication, so availability of ready-to-use data can be a challenge. So this is where we start to think about all the different contact points that we have. If somebody takes a transportation service, with their consent, we know where they're traveling to what form of travel they're taking Is it a two-wheel scooter or is it a four-wheel? Because we have various transportation services. Similarly, with food delivery, we know how frequently they buy, we know how much which sometimes it's not much and on the GoPay app itself, things like bill payments If you pay your electricity bill, we get a sense of how big your house is, and so on and so forth. So getting the data has been a challenge.
Speaker 1:Is the GoPay app also an account holding app?
Speaker 2:It is.
Speaker 1:So you can actually hold money there or get paid P2P on it.
Speaker 2:Yes.
Speaker 1:And so then, so you would have data not only on, like, what they order, how much they pay, what they pay on. You'd have some, you'd have quite a bit of data on their own cash flow.
Speaker 2:Yes.
Speaker 1:And their own rate of payment like whether they're getting regular payments, and so not only would you be able to kind of have the underwriting data for how much money they actually have in their account, but just what, the probability of what is coming in and the rate that it's coming in. That's right. So that's actually a lot of data on a single person, and I know there have been companies that are similar in other countries that have been able to lend to businesses based on their cash flow, and so this is sort of interesting because you're lending to people based on their cashflow, and so this is sort of interesting because you're lending to people based on their cashflow as much as you're lending to them on their traditional credit risk profile. It's on their cashflow, like will they be able to pay us back? Probably.
Speaker 2:And will they want?
Speaker 1:to? Probably, because it's all inside this system. So when you say 97 million are unbanked, and that's well into over a quarter of the population, and what has been the growth rate of GoPay, how many have you seen adopted and how many are you assuming are adopting it as kind of like a main for lack of a better term bank account?
Speaker 2:Yeah, yes, so we launched the app in 2023. And I'm very happy that we also won a Google Award that year, play Store Award, and we have about Thank you, thank you. There's a story behind that, but we'll talk about that later.
Speaker 1:Okay.
Speaker 2:And we now have about 20 million users in GoPay.
Speaker 1:That is a lot. How much do you think is overlapped with the banked and the unbanked?
Speaker 2:I think right now our quick sense is that probably around 50-50.
Speaker 1:That's interesting.
Speaker 2:Because we have two different profiles. We have the profile of our existing customers who are already using transportation and food delivery services, so they tend to be banked. But, however, the GoPay app is opening up new user segments and so now it's probably about 50-50.
Speaker 1:As time passes, we expect the proportion of the unbanked to only increase, as you can imagine that's pretty fascinating because, um, we've had something similar in the states with like cash app where um, for better or for worse, it sort of became the bank of choice for many people who were unbanked or who were, I hate to say, underbanked, because I don't really love that term but didn't find all the services they wanted in a traditional bank.
Speaker 1:And they literally use it almost solely and it reached out to a lot of people who were not traditionally financially included, and so this feels like it has kind of a similar trajectory. So this feels like it has kind of a similar trajectory and they had explosive growth too and kind of became the dominant one very quickly. So it's kind of interesting. So let me ask this how are you building the model for sustainable growth? What is your next step? To get customer acquisition?
Speaker 2:Yeah, so perhaps three parts, if you don't mind, rachel. The first part is how do we acquire effectively and efficiently? And then second then how do we monetize? And then third, how do we retain right? So, on acquisition, the philosophy that we have is that we need to build products that customers need, and that sounds like yeah duh, everybody says that. What we found is that.
Speaker 1:I love it. It's a no duh and it's.
Speaker 2:I think it's a lot easier said than done.
Speaker 1:It is.
Speaker 2:And one, maybe one story, which is on the GoPay app, right. So we were sitting in Jakarta, in the capital of Indonesia metropolis, and we're sitting there, we're designing this new GoPay app, right, and we had an idea what it would look like. It'll be black, it'll be cool, it'll have gold accents, and we were really convinced that this is what customers wanted. We then went on to test the product Classic case, right, and we did not stay in Jakarta, the capital, so we went to some second-tier and third-tier cities and the comments and the feedback was very damning. It's like no, we don't understand what this is, why do I need this for? And so we had to go back and really, really redesign to make it super streamlined, super no-frills. One feedback that we got is that, hey look, I don't have a lot of RAM on my phone, right? So if you have too much graphics or anything that's animated, it takes up too much RAM and I'll have to delete other apps. So I think that is the one area.
Speaker 2:And Indonesia how do I say this? Right, it is an archipelago country. It's 17,000 islands, which means that, you know, ideas can be very different, cultures, subcultures can be very different from island to island. So, in a complex environment, we like to believe that being a local player has its advantages, because we understand how the psyche and it's not like you can do simple research, do a focus group and get a sense of how it operates, because there are probably, you know, hundreds and hundreds of different, different types of subcultures, so it's really coming from that. Um, you know, we use that to build our products. Um, we have one account, a bank. We work together with a bank, um, with a digital bank in indonesia called bank jago, to a bank account. We work together with a bank, with a digital bank in Indonesia called Bank Jago, to create a bank account. We don't have a bank license, so we work with them, and it's not the first time that an e-wallet has worked together with a bank and many banks can download their own apps and open a bank account. But we work very, very hard with this digital bank and with Regulator to streamline the KYC process, which took a lot of effort.
Speaker 2:So I guess what I'm trying to say is how we acquire users. We can't use money that went passe about five, six years ago, that it has got to be based on user insights. Secondly, how we monetize, because you can have a lot of users and still not make money, which again is very uncool these days. And monetization is coming from value-added services such as credit, by providing credit services. And when we say credit, it really, at the end of the day, is a data business. How much data can you acquire? How relevant is the data? Can we convert that data into underwriting decisions that are better than others? And there the art form is not just the refining of the data, but it's also getting the data and finding more and more sources where we can get such data. Now, lastly, on retention, it has got to be on ways that provide user delight. So simple things, right, like we experimented with many things, like we did streaks, for example. Right, and that has worked to some extent. What's a streak? So, if you keep doing one thing for three times, three consecutive?
Speaker 1:days and then you go to something you order the same drink three days, exactly, okay.
Speaker 2:I think what we find is, perhaps in countries like Indonesia, I think people enjoy how do I say this? Things that have entertainment value. So people come back and play simple games, and again, we're thinking really here of the mass market, where maybe a lot of them have a little bit more time on their hands and, however, a lot less assets, a lot less purchasing power. So how can we retain them to keep coming back to the app to do things that may not be fintech-related, just to keep them engaged on the platform. And when they do that, when they play these mini-games, which we are still in the process of rolling out, it's also additional information of their preferences that can go back, and then again it becomes a self-reinforcing virtual cycle.
Speaker 1:Right, I mean, a virtual cycle is always interesting. What I'm wondering about here you're offering this small credit offering and you're offering to consumers it's like a BNPL these types of credit offerings Are you looking at offering to merchants? Are you looking at the opposite side of this? Do you guys also operate? Is GoPay also a merchant POS? Okay, so talk to me about that because that's a different data set. Sure but it would be just as applicable and maybe more Sure, maybe even more so.
Speaker 2:So, once we have once we launched a gopay consumer app in 2023 um we actually launched a gopay merchant app in 2024 okay, so you did follow it up with the app just just a year ago.
Speaker 1:Well, how could you not? Yeah?
Speaker 2:Yeah, and I think what we spend a lot of time agonizing over in the Merchant app is look which segment of the merchants right, Because the enterprises obviously are out of scope, and don't need it. And don't need it. You've got the small and medium businesses. Small business and medium business can be very, very different in sophistication.
Speaker 1:Well, and that can mean anything from like five to like 800 people. Correct, there's a really wide breadth there, exactly you might need to refine what the small and medium businesses are.
Speaker 2:And then there's also the informal merchants, right, the micro merchants, and in Indonesia there are tens of millions of them. So when we launched the GoPay Merchant App, we took some of the learnings from the consumer app and we really targeted the merchant app more towards the micro and smaller side, and there what we find is a lot of the behavior is similar to consumers, but they need slightly different things, like working capital, short-term loans and things like that.
Speaker 1:But it is a similar thing. It's like the same kind of data that a consumer that you could underwrite a BNPL loan to a consumer is very similar to the ways that you would think about lending to a micro merchant, so that's actually really fascinating. Well, I okay, I'm gonna. One last question what did you win the Google Award for?
Speaker 2:No, we won the Google Award for the best FinTech consumer app in Indonesia in 2023.
Speaker 1:Congratulations.
Speaker 2:Thank you so much.
Speaker 1:And it sounds super well-deserved. I think it's great and I'm really glad to hear that you like looking at both the consumers and the micro merchants. I think that's going to be amazing in the long term. I wish you all of the best. Thank you, Rachel Thank you so much for coming in today.
Speaker 2:My pleasure. Thank you so much.
Speaker 1:Just so I can end this on a semi-reasonable note. Thank you to all of our listeners out there. We love having you guys listen to us here at the Money Pot, Money 2020. If you have an idea for a podcast that you would like to do with us, please write us at podcast at money2020.com. Thank you, guys so much. Have a great day.
Speaker 2:Thank you.
