Open finance startup Ayoconnect’s APIs enable financial inclusion in Southeast Asia
Focused on Southeast Asia, Ayoconnect’s APIs make it faster for businesses to launch new financial services, instead of needing to build their own tech infrastructure. It is also licensed by Indonesia’s central bank, enabling it to offer more services. The open finance startup announced today it has closed a $13 million Series B extension round led by SIG Venture Capital, with participation from CE Innovation Capital and returning investor PayU, the payments and fintech business of Prosus. This brings its total raised to $43 million, including the oversubscribed first tranche of its Series B, which was led by Tiger Global and closed in January 2022.
Founded in 2016, with a team of about 250 people, Ayoconnect is currently working toward more financial inclusion for Indonesian consumers and SMEs. It works with regulators and incumbent banks, and was recently awarded a Bank of Indonesia (BI) Payment Service Provider Category 1 license. Ayoconnect says it is the only open finance player in Indonesia to be licensed by the central bank.
Ayoconnect’s new funding will be used for leadership hiring, and on its Ayoconnect’s product and technology, including new solutions for payments, data and banking and new APIs for account opening and card issuing.
The startup recently launched automated recurring direct debit with seven of Indonesia’s largest banks (Mandiri, BRI, BNI, CIMB Niaga, Danamon, Bank Syariah Indonesia and Bank Neo Commerce). This allows Ayoconnect’s clients to use its direct debit API and get the ability to make recurring debits from customers’ savings accounts at multiple banks.
Before starting Ayoconnect, founder and CEO Jakob Rost was a managing director at Lazada. After leaving Lazada, he spent several years living in Indonesia, where he saw how the country could benefit from more digital financial inclusion. For example, it is the fourth largest country in the world by population, but about half of people are unbanked, he said. It also has a complicated geography, resulting in a weak financial infrastructure, fragmentation and less standardization in the banking sector. Furthermore, Rost added, consumer-facing businesses in Indonesia don’t have the digital financial infrastructure to manage their own finances while serving customers.
Ayoconnect raised again so soon after the initial close of its Series B because it was growing rapidly and also secured important strategic partnerships after receiving its BI license. Rost said the new capital will strengthen Ayoconnect’s balance sheet and prepare it for future growth over the next few years.
The platform now serves 200 API customers, including large banks, financial institutions, tech unicorns and fintechs, and offers more than 4,000 embedded finance products. Its APIs are cover two categories: open banking APIs and payment services APIs, with the goal of building the most complete open finance stack in Southeast Asia.
Some examples of financial services that Ayoconnect’s clients have launched include the aforementioned direct debit, embedded finance (it partnered with PT. Kereta Api Indonesia (KAI), the state-owned operator of railways in Indonesia) to launch new ticketing and productivity features in the KAI Access mobile app, which enables users to buy cellphone credits, internet data subscriptions and electricity tokens). It also partnered with Bank Syariah, Indonesia’s largest Islamic bank, to add new digital and mobile capabilities with the goal of greater financial inclusion and economic growth among its customers.
Other Southeast Asian startups in the open finance space include Brick, Finverse, Brankas and Finantier. One way that Ayoconnect differentiate is by being the only licensed open finance platform in Indonesia, which enables it to offer solutions that aren’t available on the market yet.
“While open banking and open finance are reasonably well-established in Europe and the US, the industry is still very young in Southeast Asia but is growing rapidly. In Indonesia, hundreds of millions are embracing new digital services while many more are still without access to basic financial services like bank accounts,” said Rost.
“As such, there is huge potential for open finance in the region and a ton of opportunities for the sector to grow further. We’ve been really excited to see the activity in the space and to be playing a role in helping to move the ecosystem forward.”
In a statement, SIG Venture Capital’s Akshay Bajaj said the Ayoconnect team “have been running high volume APIs for years and are incredibly well positioned to help customers launch compelling and profitable use cases quickly and securely. As a result of its expanding capabilities, Ayoconnect continues to experience strong and growing demand from banks and API clients. We love their vision and believe they have the potential to transform and enhance the future of payments in Southeast Asia.”