duithape- Digital Aid Distribution

Sara Dhewanto is Founder and Managing Director of Duithape, a fintech company focusing on e-payments for the unbanked focusing on digital aid distribution. Duithape won first prize at the APEC Global Innovation through Science and Technology Competition in 2019 and won Seedstars Best Startup in Indonesia and represented Asia to the Seedstars Global Summit in Switzerland.  

Before founding Duithape, Sara was Finance Director at MCA-Indonesia; responsible for managing USD 600 million grant from US Government to reduce poverty in Indonesia. She had a 10-year career with ExxonMobil, last as Head of Treasurers and she started her career as a management consultant at Booz-Allen & Hamilton.

Sara was top of her MBA class in State University of NY at Buffalo, and has a Bachelors from Faculty of Economics, University of Indonesia as well as a Fellowship from Massachusetts Institute of Technology.

The problems that I seek to solve is financial inclusion. The majority of Indonesian adults do not have bank accounts,  making financial transactions very difficult and flow of funds highly impeded. This is the root cause of many significant social issues, such as prevalence of loan sharks, corruption, urbanization and high income inequality. 

Through Duithape, a FINTECH company that I co-founded, I am proposing the scaling of our flagship B2B2C Digital Aid Distribution system. Our project enables our client donors to easily distribute accurate, safe and accountable mass aid to the unbanked poor. The aid also boosts the local economy as it is distributed through a network of local micro stores that in turn gain significant sales. 

Using our system, this network of micro stores can also serve as an agent of financial services for their community; creating financial access and boosting the local economy.

The majority of Indonesian adults, or over 130 million people, are unbanked. With about 90% of Southeast Asia’s poorest found in Indonesia and Philippines,  we deduce that a significant proportion of the unbanked will range across lower-middle-income earners, low-income wage earners and informal economy workers. Consequently, performing both commercial transactions and aid distribution which are vital to the economic growth of these individuals are daunting, cumbersome and largely untransparent. Indonesia being an archipelago further reduces the viability of cash and in-person transactions, making them more difficult ordeals for those with limited access to brick-and-mortar banks and commercial facilities.

According to Statista (2020), smartphone penetration in Indonesia is about 30.5%. Therefore, there are still limitations in financial inclusion with smartphone-centric products produced by most Indonesian FINTECH startups. It is for this reason that Duithape sought to provide an facial recognition payment system operated through a network of community members (micro entrepreneurs who serve as agents) so that end users who do not own or operate smartphones can have equal access to the system. The adoption of agent networks across cities and rural areas creates the potential for low-cost widespread access for both Duithape and end users respectively.

The flagship project being presented is B2B2C Digital Aid Distribution. Clients (donors) are able to carry out efficient, traceable and mass distribution of cash and e-vouchers through Duithape’s system. Duithape creates accounts for the predetermined beneficiaries and credits their accounts with the authorized sums/vouchers. These beneficiaries can then redeem the aid at local micro stores which serve as agents simply by showing their face and entering a PIN, without needing a bank account/card or phone.

The agents experience increased sales, gain finance records, and new customers. In addition, they gain a duithape account which  can be used for transfers and bill payment, and to develop financial profiles from their transaction trails. 

This flagship project is being expanded into a service line to be used for other forms of mass disbursement to the unbanked beyond aid distribution. The model has been upgraded to cater to mass microfinance loan payouts and payroll functions.

Essentially, the B2B2C cashless digital payment system allows the unbanked to access seamless mass inflow of financial resources while the inherent account functions enable the end users to achieve utility through different forms of transactions that the banked are privy to. 

B2B2C approach that Duithape adopts, multiplies the scope of the project’s impact per the amount and categories of beneficiaries.  For the agents who are micro entrepreneurs, it creates higher sales volumes as it traffics in new customers and sales and increases income. The system not only gives them access tofinancial services but also creates digital transaction history that can be used to take better advantage of credit and procurement opportunities. 

Most aid beneficiaries are individuals with limited education with inadequate financial and digital literacy skills, living and working in slums and similar low-brow regions of Indonesia. The Duithape system has been designed to be so easy that it can service anyone at the bottom of the pyramid, from 5 to 80 years old and even the disabled. No bank, no card, no phone needed. 

Creation and access to the user accounts is powered by facial recognition technology, removing the need for manual imputation of account information or sourcing of information requirements for account management. Additionally, the network of small neighborhood stores scattered all across Indonesia that acts as agents ensures uninhibited access for end users and community.

The central purpose of this flagship program is to bridge the gap between unbanked individuals who are mostly economically disadvantaged and the economic opportunities that they need to break out of poverty. Traditionally speaking one of the reasons for the exclusion of women and informal economy workers from policy interventions and socioeconomic programming is the inadequacy of information on them – financial, commercial, and fiscal. More so, this program discourages the impoverishment of bottom-of-pyramid groups stemming from leakages in humanitarian relief and development funding due to opaque disbursement systems. 

Previously, I was Finance Director at Millennium Challenge Account Indonesia (MCA-I), responsible for managing a $600 million grant from the US Government to reduce poverty in Indonesia. As Finance Director, my main job was to manage the funds and ensure that it could be fully accountable. However, since most Indonesians are unbanked, it was very difficult to distribute the funds. Even though the bank we used was considered as the village bank with the largest network in Indonesia, they were not able to transfer the funds. We eventually had to physically bring and hand out cash. I thought that it was crazy that there was no other way. This needs to change. There needs to be a solution. 

So I decided to resign from my position and use my entire life savings to found duithape to create a solution to solve this problem.

Digital aid distribution is also the perfect launching pad to solve financial inclusion, as aid is free money, it also makes people more willing to try something as abstract as digital money and payments. The process creates trust as people realize digital money has value just like cash.

I am Indonesian, born and raised. I truly love my country want and am deeply saddened that so many Indonesians are poor, even though our country is very rich in natural resources. I want to be able to make a difference and increase the well being of our people.

The high unbanked population makes financial transactions very difficult and flow of funds highly impeded. This is the root cause of many significant social issues, such as prevalence of loan sharks, corruption, urbanization and high income inequality.

My dream is for anyone in Indonesia to be able to have access to financial services and be able to make and receive digital transactions easily, regardless of where or who they are. I fully believe that this will be a major factor in boosting the Indonesian economy and reducing income inequality.

As  I ran my startup, duithape, I have met many people from other countries that have stated that their countries face similar issues and need a solution like duithape as well. This drives me even more, as I know we can expand and generate impact on a greater scale.

I have twenty years experience, mostly spent in Corporate Finance. I had a ten year career at ExxonMobil and as Head of Treasurers Department, I was responsible for managing the hundreds millions of dollars for all of ExxonMobil’s operations in Indonesia. However, I wanted to make a difference and decided to leave ExxonMobil to do non-profit development work. I then became Finance Director at MCA-I, managing a $600 million grant from US Government to reduce poverty in Indonesia. In both organizations, I also had to build a new financial system using SAP.

 In addition, I also have experience as a Management Consultant at Booz Allen & Hamilton and in Palladium, where my job was to solve high level problems.

My extensive experience in managing funds, systems building and problem solving provide me the unique background and skills to create a system that addresses the problem of financial inclusion. In addition, my wide network in corporate, non profit and government also has opened many doors and enabled me to understand each point of view and enable collaborations between these sectors by providing win-win-win solutions.

For example, we are now working together with World Vision to distribute Covid-19 relief funds from corporations like MasterCard and HSBC in collaboration with the regional government to the unbanked poor.

Being an entrepreneur has been the most difficult thing I have done in my entire life. 

We first used a B2C approach and acquire Agents and Users one by one. Our investor put a milestone as a prerequisite to draw down on the next tranche of funding. We were confident that we would reach it, but the market proved us wrong. We had already spent the investors fund and ran out of cash.

I sold all of my gold, withdrew all of my foreign exchange savings and took out personal loans to be able to pay my staff until we were able to secure another investment.  We learned from our mistakes, reevaluated our strategy and pivoted B2B2C digital aid distribution as a low-cost acquisition strategy and gain a source of B2B revenue.

70% of startups die before their second year, while 90% die within five years. Although we have run out of cash multiple times, we have managed to stay afloat. We have finally found product market fit after having to pivot twice and having to completely overhaul the IT team three times. And now in our fifth year, in the midst of a global pandemic, we are growing exponentially.

After running out of bootstrap funds, I called all my staff and announced that we may need to close up shop, because I only have enough funds for one month salary. I said to them to prepare to look for another job in the event that happens. 

However, the next day, my staff called me to a meeting and asked that I do not dissolve the company. They then asked for an 80% pay cut so we can continue until at least a few more months until we get investment because they fully believe in what we are doing.

I was astounded. I asked how on earth they can feed their families with an 80% pay cut? One said his family has enough income from his wife. A father of five children said he will reopen his printing shop on the side to get additional income. Another one offered to work without pay. I was brought to tears.  

Thank God we did manage to get an investment before the end of the year.  Later, I gave my early staff shares to the company. It was the least I could do.

The Duithape e-payment system has been designed to be so easy that it can service anyone at the bottom of the pyramid, from 5 to 80 years old and even the disabled. No bank, no card, no phone needed. 

Now 16,000 people, 300,000 by next year and 5 million people by five years

We will be able to dominate the digital aid industry in Asia

Sufficient financial means to pursue all the project pipelines we currently have on hand.

Continue to fundraise until we have sufficient funds to become profitable and self sustaining.

Charity organizations, Government and donors. They are our clients and our services to digitally distribute aid.

Duithape is fintech company providing an e-payment, focusing on the 130 million unbanked people in Indonesia. Our strength is our ability to cater to anyone; non tech savvy users from the ages 5 to 80 years old and even the disabled. Through facial recognition technology, they only need to provide their face and enter their PIN to shop. They do not need to own a phone or a card.

Duithape uses a B2B2C approach, currently focusing on digital aid distribution in Indonesia. Duithape has distributed aid on behalf of the Government as well as local and International Donors to the people at the bottom of the pyramid in way that is massive, safe, efficient, highly accountable and traceable. We do this by enabling cashless redemption of goods at our network of Agents/ Merchants that act as distribution points.  Previously, our Client organizations had extreme difficulty because they had to hand carry goods and/or cash and distribute them in person to beneficiaries. Now, with duithape, they just need to give the instructions and it distributed in minutes to the correct recipients, with clear accountability.

The Digital Aid Distribution strategy also enables us to gain Agents/Merchants easily. These micro merchants usually heavily prefer cash and are difficult to convert to cashless digital payments. However, because we increase merchant sales, they love collaborating with us and do not mind to convert to digital payment. 

We mainly gain revenue stream from two sources:

• Clients: We charge a transaction fee, usually 3% of each of the amount distributed. And we may also charge an onboarding fee if the client requires us to do so.
• Merchants: We charge a 3% Merchant Discount Rate (MDR) on each redemption.

However, Aid Distribution is a low-cost acquisition strategy for us, and we will use this as a basis to expand to other verticals to generate higher more stable revenue stream:

1. Aid Distribution: Enable digital aid distribution for organizations & government
2. Lending payment: Enable banks and lenders to make digital disbursement and collection of micro loans to the unbanked
3. Commercial payments: Enable companies/ factories to make digital payroll to their unbanked staff or make digital payments to their unbanked suppliers
4. Data Play: Enable Data analysis of the unbanked for FMCG companies (for FMCG  data), banks (for credit scoring),  and Governments that which to apply data driven policy
5. Remittance: Enable sending digital money, especially for migrant workers (domestic & international)

We have raised a total of USD 315,000 from Teja Ventures, Plug N Play, Angel Investors and UNCDF.

We are also now already generating revenue, but not yet profitable.

We are now seeking to raise USD 500,000 from a combination of equity and grant financing

We estimate around USD 373,000

To be able to gain funding to execute all our current pipelines and further scale our solution.

We need funding and also access to better tech talent beyond Indonesia.

International organizations/ Goverment such as  USAID, DFAT, World Bank etc to execute their projects, especially related to aid distribution, financial inclusion or SME empowerment