By Janice Sa

Embedded financing is transforming the global lending landscape, enhancing user experience while lowering customer acquisition costs (CAC) for businesses. In Southeast Asia, this model has gained traction among BNPL (Buy Now, Pay Later) players in consumer lending; however, the business lending sector remains largely untapped. In Indonesia alone, the MSME (Micro, Small, and Medium Enterprises) financing gap is estimated at $234 billion, according to a 2023 IFC report.

Finfra is strategically positioned to lead in the B2B embedded financing space, backed by its full licensing and tailored API integration technology.

Finfra’s Solution: Lending as a Service (LaaS)
Finfra provides a Lending as a Service (LaaS) platform, enabling non-financial businesses to offer credit services to their MSME customers, leveraging existing transaction data. By partnering with these platforms, Finfra can leverage their internal data to better understand borrower profiles and unlock new lending opportunities for both the platforms and borrowers.

In this model, platform businesses can offer credit services without taking on significant responsibility. Finfra handles technology integration, regulatory compliance, data analytics, and even the acquisition of lending licenses. Additionally, Finfra offers access to a network of lenders for platforms that want to provide credit services without becoming lenders themselves. This creates a comprehensive ecosystem where all stakeholders benefit:

Finfra’s Value Position
・Lenders: Access untapped borrower segments without needing their own lending licenses, which is crucial since the OJK (Financial Services Authority of Indonesia) halted new license issuance in December 2021.
・Platform Businesses: Enhance customer retention, increase lifetime value (LTV), and boost GMV (Gross Merchandise Value) and revenue.
・Borrowers: Access loan products that were previously unavailable or difficult to obtain.

Why ZVC invest in Finfra?
With these compelling value propositions, we believe Finfra is well-positioned to bridge the MSME credit gap. Beyond the product, we are particularly excited about Finfra because:
・Scalable Model with Low Risk: Finfra acts as a facilitator rather than a lender, avoiding direct exposure to Non-Performing Loan (NPL) risks and the need to source disbursement capital—common challenges in the lending space.
・Strong Market Advantage: Finfra has secured the necessary licenses in a heavily regulated environment, providing a significant barrier to entry for new competitors. Additionally, their specialized technology for embedded financing and a strong commercial pipeline give them a first-mover advantage against incumbents.
・Synergy with LINE Bank: We see immense potential for collaboration with our affiliate, LINE Bank, and other banking entities under LINE as Finfra scales globally.

We believe this model is a powerful and efficient solution for closing the credit gap in Indonesia. We are thrilled to be a part of Finfra's journey alongside fellow investors Cento Ventures and Accion Venture Lab, and committed to supporting the Finfra team as they grow and succeed.