People queue at an outlet of state-owned pawnshop Pegadaian in Semarang, Central Java, to obtain financing in this file photo. ( Munir )

State pawnshop Pegadaian on the lookout for fintech partners to develop digital financing


State-owned pawnshop PT Pegadaian is seeking several fintech partners to develop digital financing to expand its business and benefit from the rapidly growing sector.

Pegadaian president director Kuswiyoto said on Thursday that the partnership with fintech operators was expected to further develop services the company provide in the Pegadaian Digital mobile apps.

“People used to say fintech is a threat, but I say this is an opportunity because it’s going to grow big,” Kuswiyoto told a press briefing on the company’s business performance in 2019. The company has not yet disclosed its potential fintech business partners.

The fintech partnership is expected to help Pegadaian’s target to grow its financing by 17 to 18 percent this year and profit by 10 percent. In 2019, Pegadaian’s profit grew 12 percent year-on-year to Rp 3.1 trillion (US$226.2 million), while outstanding financing grew 23.3 percent to Rp 50.4 trillion over the same period.

The company’s overall positive performance last year was driven by Pegadaian’s digital innovation and its products and its initiative to collaborate with partners, including e-commerce companies such as Blibli and Tokopedia, to market their products, said Pegadaian director for finance and strategic planning Ninis K. Adriani.

“One of our strategies to drive our business is through business-to-business partnerships. As of today, we have partnered with 541 companies, both state-owned and private companies, to synergize our business. We also work with e-commerce companies such as Tokopedia and Blibli to help us grow our business,” since Ninis. 

Pegadaian currently has 13.86 million customers, a 30 percent increase from 10.64 million in 2018, thanks to its digital operations that have helped ease the customer experience.

Ninis added that to finance Pegadaian’s future expansion plans, the company will issue sustainable bonds worth Rp 10 trillion for a two-year period.

“Previously we reduced our [physical] outlets and replaced them with our online channel, and surprisingly our productivity has increased after that. This year we will explore which services can also be replaced by our online channel,” said Pegadaian director for information technology and digital Teguh Wahyono.

Teguh added that Pegadaian would also collaborate with more giant e-commerce and digital payment platforms, as the company broadens its online channels.

One of Pegadaian’s services that would be digitized is the company’s leading product, Tabungan Emas, which allows customers to save gold instead of hard cash. Tabungan Emas, which translates as gold saving, saw stellar growth in 2019, as the number of customers more than doubled to 4.6 million from 1.7 million in 2018.

The balance amounts in Tabungan Emas also increased to 4.3 tons of gold in 2019, more than double the 2.1 tons seen in 2018.

Pegadaian will launch a gold card similar to a credit card for customers of Tabungan Emas, thereby enabling them to conduct transactions using their gold savings. Kuswiyoto said the company will partner with three state banks and one private lender in issuing the credit card-like gold cards.

"We will offer this card to our Tabungan Emas customers in which customers can use the card just like a credit card and can make transactions with merchants or withdraw money from ATM machines," said Kuswiyoto.

The gold card will use the customer’s gold savings to determine their credit limit based on the customers’ gold savings in Tabungan Emas.