SG fintech startup C88 acquires Indonesia’s IDX Optus to ramp up credit scoring capability

In a bid to become a leader in Southeast Asia’s credit decision analytics and scoring space, Singapore-based fintech company C88 Financial Technologies has acquired Indonesian analytics and information management company IDX Optus.

Following the deal, the team and operations of IDX Optus will co-locate with that of C88 in Jakarta to focus on serving the Indonesian market together, before establishing a Philippine presence by early 2020, per an official statement.

Financial terms of the transaction were not disclosed.

For C88, which operates financial marketplaces CekAja.com in Indonesia and eCompareMo.com in the Philippines, the strategic acquisition is expected to further strengthen its credit scoring expertise, having already enhanced its credit decision analytics and scoring capability through a partnership with global information services provider Experian.

Jakarta-based IDX Optus group – which consists of two companies PT IDX Consulting (id/x partners) and PT Optus Solution – offers analytics and information management solutions, including cognitive and predictive analytics, artificial intelligence, machine learning, data management, decision support and credit risk management.

The company also provides productized software solutions, including iDecision Credit Risk, iDecision Liquidity Risk, iDecision CRM, and iDecision Digital Lending.

C88, meanwhile, is a licensed financial marketplace operator, which offers services such as credit scoring, data analytics and fraud detection services to its clients. The company has raised a total of over $45mio in investment, the latest of which came through an oversubscribed $28-million Series C round last year led by Experian and joined by a number of other backers including responsAbility Investments, DEG, Monks Hill Ventures, InterVestKejora, and Korea Investment Partners.

According to C88 co-founder and CEO J. P. Ellis, the acquisition of IDX Optus was driven by the increasing importance of data and analytics in the region’s unique financial services industry.

“The region’s financial services industry is unlike many other technology verticals,” continues Ellis. “It is multi-polar instead of zero-sum, and inequities such as low levels of access and inclusion persist not because of a lack of demand or lack of capital adequacy on incumbents’ balance sheets, but rather because the industry has historically lacked data as well as tools to create insights and intelligence from data.”

The data landscape in much of Southeast Asia is known to be fragmented and complicated with data assets scattered across different companies and platforms. This has resulted in pockets of information stored in many different places, Ellis said, which makes it difficult for lenders to obtain data and make decisions on it.

The key to tackling this, he believes, is through openness and cooperation – something C88 will be looking to implement through its integration with IDX Optus, which has been serving top-tier clients across numerous sectors in the country.

“We are excited to work with many data asset owners. We already work with many of them, some telecommunication companies, banks and multifinance companies, and we are continuously expanding the scope of our partnerships,” he said.

Indonesia, which has a large unbanked population with very little credit history, does not have a centralized scoring database. This has prompted many players to build their own credit scoring infrastructure, including many of the country’s financial institutions and players in the rising peer-to-peer lending space.

Regionally, startups that have provided solutions in the credit scoring and analytics space include Singapore’s CredoLab and Vietnam’s Trusting Social.

With the acquisition of IDX Optus, C88 is confident it can be one of the larger and more technically capable players in the market.

Anton Hariyanto, co-founder and CEO of IDX Optus said that his company will leverage advanced machine learning capabilities, in-depth local business knowledge and superset of data to bring more accurate risk prediction model to institutions.

“What we want to accomplish is to build a world-class scoring system based on traditional and alternative data sources available to C88, so we can better assess the risk profile of the customers,” he said.

By becoming part of the C88 group, Hariyanto said the IDX Optus can offer digital onboarding from end to end, making it easier for clients to assess the creditworthiness of customers and make a decision faster.

“This way companies would not have to invest too much in technology, resources and change management, while also giving them flexibility in terms of getting the particular services they need,” he said.

However, what could potentially set it apart from the others, Ellis argues, is the ability to go direct to the consumer through Cekaja.com and eCompareMo.com. As oppose to a B2B approach, which is troublesome in emerging markets like Indonesia and the Philippines where not many people have a credit record, a direct approach will allow the company to build more of an interaction with consumers and get them interested in their own creditworthiness.

“Someone in a small region or city will be able to check their score and if they find it not really good, they can improve their score. This can be a breakthrough,” Ellis said.