Episode 3, Learning Playbook, Risk in a lending business with Iwan Kurniawan, Co-Founder and COO of Modalku Group
About Iwan
Iwan Kurniawan is the Co-Founder and COO of Modalku Group, also called Funding Socities, that is an SME Lending Fintech focussed in the SEA markets. Modalku is funded by leading investors Sequoia Capital, Softbank Ventures Asia, LINE Ventures, Alpha JWC among others, and was the first Asian startup to win the Global SME Award for technological innovation and social impact (awarded by the United Nation's agency for ICT).
Prior to Modalku, Iwan was a management consultant with global consulting firm Oliver Wyman, specializing in strategy development and risk management within the Financial Services industry. He graduated from Cornell University's Applied Economics and Management program; and has lived and worked in 5 countries (Indonesia, Singapore, Thailand, China, United States), and is conversant in 5 languages (English, Bahasa Indonesia, Mandarin Chinese, Cantonese, Thai).
Key Takeaways
Iwan's career since he started vs now
Iwan's diverse skill set and learning playbook: Iwan has been with Funding Societies for seven to eight years, initially as country head for Indonesia and co-founder. He went on to build the company's risk function, enter the Thai market, and grow other functions, eventually becoming chief growth officer. Iwan built a diverse skill set and grow across roles in the company (Growth, M&A, Operations) even when resources like articles, books, and courses might not be readily available to build credibility and knowledge across such fields / roles.
Iwan's learning playbook to 'became an expert in just 30 days'
Iwan used this extensively to build context in mergers and acquisitions to figure out why a specific M&A deal was in scope, how to figure out post merger integrations, concerns from the board, and relied on his personal network for advice and avoiding pitfalls.
Particularly, Iwan has mentors at the Endeavor Network for assistance in learning about various topics. He and Kelvin (Founders) had around 50 conversations with mentors per year, greatly expanding their knowledge. Iwan has a balance of informal and established networks to rely on for mentors.
Building a future-proof network
Iwan built a future-proof network for himself to handle the variety and complexity of problems he faced in senior management roles. For growth, Iwan approached both junior and senior folks; for eg, a senior exec would talk about how to create an organization structure for growth, a PM would talk about the tactics to increase acquisition for eg, which is different levels of seeing the same problem.
Managing risk and compliance in a lending business
With various aspects like credit, fraud, technology, compliance, and regulatory risk, building a risk function can be intricate and overwhelming. What stood out for Iwan is not create your own playbook based on your context, listening to different perspectives, as a strategy that works for another similar company (best practice) may not actually work for you.
"A fintech company is a creature of regulation".
For eg, China's peer-to-peer lending industry, which faced significant turmoil when regulations were introduced after being unregulated for over a decade (WeChat). Iwan discussed the importance of understanding regulators' priorities, as well as the role of risk management being a second line of defense to challenge and advise the first line like credit risk managers. He stated that this is achieved through a combination of data modeling, scenario analysis, and risk appetites that form the risk management framework for a fintech company like Modalku. Iwan's transition from risk to a Chief Growth Officer role has been more of a blessing than a curse, as it helps him understand the impact of growth on risk metrics.
Areas of interest, which piques Iwan's interests
Stay updated on 3 areas—market, industry, and regulation
SME Lending is the primary industry for Modalku. That being said, for consumer behavior and market, Iwan seek counsels VCs and startup founders for what's coming up (eg the rise of EVs, digital invoicing). In the regulatory aspect, he stays informed through the Fintech Association board and fintech Lending Association, given it make or break an industry.
What Iwan looks for in his execs
Particularly, Iwan looks at grit and critical thinking when evaluating potential candidates. Regarding technical roles like data engineers, product managers, and growth managers, he mentions that while it's beneficial for individuals to be aware of the lending and payment industries, it is not always a must-have skill, as lending practices can vary between companies and the talent pool may not have extensive experience in fintech; he values foundational expertise and is willing to teach lending to the right candidate.
The lack of data technology, engineering, risk management, product management, and growth marketing talent in Indonesia is a concern for hiring talent in SEA, more broadly, where Iwan encourages upcoming talent to skill up.
Insights about the Indonesian SME landscape
Top priorities for Indonesian SMEs: "We need money" and "We need more business"
- Indonesia has a lack of managerial talent to enable companies to scale
- For offline businesses, massive inefficiencies exist in supply chain, has higher cost of labor (3x to 4x), and 17,000 islands complicate the economy.
- Despite these challenges, COVID-19 increased demand for fintech among Indonesian SMEs, with many millennial entrepreneurs turning to them for their first option of funding, showing a need to access quick capital for SME growth. Nihit talks about a sense of shame / stigma for SMEs to acknowledge that they've taken money from a fintech, cause that meant a bank declined them, though this is changing slowly.
Iwan's learning from his past failure while building for Warung's
Modalku wanted to serve micro businesses, particularly Warungs (small shops) in Indonesia, both online and offline. The hypothesis was that by going offline (after being online), they could cater to Warungs without much of a digital footprint. This strategy initially showed profits on some cohorts, but when the COVID-19 pandemic struck, many Warungs disappeared, leading to significant losses. Focus as a learning became crucial, helped him made better decisions, especially as Head of Risk.
Iwan's recommended books for young and middle managers (54:59)
- "How Will You Measure Your Life?" by Clayton Christensen - Iwan became a well-rounded person by reminding him of the importance of relationships and family
- "Leadership That Gets Results" by Daniel Goldman on Harvard Business Review - taught Iwan about the six different styles of leadership and how effective leaders can use a combination of these styles to achieve better results.
Connect with Iwan on LinkedIn if you have any questions.
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