Multifinance Companies in Indonesia: Types and Examples

Multifinance Companies in Indonesia: Types and Examples

The increasingly complex financial needs create an opportunity for financing institutions to flourish in Indonesia. One such institution is multifinance companies. Compared to other financing institutions, multifinance institutions have different funding schemes to fulfill their customers’ needs.

Read the following parts to understand more about this particular kind of financing institution!


Multifinance companies are companies that provide financing services for goods procurement. This kind of company is different from banks as it is not authorized to receive money savings from customers. Even so, multifinance institutions are regulated by the Financial Services Authority (OJK) to give financial loans to customers. They are regulated in OJK Regulation Number 29/POJK.05/2014 concerning the Implementation of Finance Company Business.

The difference between multifinance companies and conventional banks is their funding schemes. Within banking institutions, customers can immediately collect their funds in cash. On the contrary, multifinance institutions have a different way of funding their customers. They do it by offering cash to merchants, in which the merchants will then give goods bought by the customers. Eventually, the funds given to the merchants will become the debt customers must pay.

Read also: Finance Company: Types and Schemes


Multifinance companies can be categorized based on their goods. The following are examples of multifinance institutions commonly seen in Indonesia.

1. Multifinance for Vehicles

These multifinance companies provide funding schemes to purchase vehicles from credit financing to leasing financing and term credit financing. Furthermore, some of these companies also offer insurance for vehicle buyers to prevent their vehicle’s damage or loss.

2. Multifinance for Heavy Machinery

Multifinance institutions also serve business clients in purchasing heavy machinery for their business operations, such as trucks and excavators. This service can be adjusted based on the client’s purchasing capability. It’s common for multifinance institutions with this specialty to offer other services like insurance and heavy machinery maintenance to improve customer satisfaction.

3. Multifinance for Household Furniture

These multifinance institutions provide funding schemes to buy household furniture such as ACs, washing machines, and televisions. They also offer funding schemes for buying smaller things such as kitchen utensils, toiletries, and similarly sized furniture. By doing this, they can help customers in buying household furniture with fewer expenses.

Available Services

Multifinance companies have several business services to assist customers, including:

1. Leasing

The first business service by multifinance institutions on this list is leasing services. With this concept, these institutions take the role of buyers of capital goods such as vehicles and heavy machinery that clients want. Then, these goods will be leased to clients within a certain period to simplify access without burdening them with permanent ownership.

2. Factoring

To simplify purchase transactions, multifinance companies offer factoring services for customers to manage receivables. With this service, multifinance institutions buy receivables from customers with a certain discount to ensure customers immediately have the funding they need. The companies will then be responsible for collecting receivables from debtors.

3. Credit Card

Multifinance institutions also offer credit card services. With credit cards, they can provide credit limits to customers that will be used for purchasing goods. This service gives flexibility to customers in buying goods without spending cash.

Read also: Essential Elements of Credit for Granting Credit Loans

4. Consumer Finance

Consumer finance is also available from multifinance institutions to help clients in buying consumer goods such as furniture. With consumer finance, these companies offer loans to customers within a certain period. Customers have the chance to immediately own these consumer goods without having to pay them upfront in cash.

Differences from Other Financial Institutions

In Indonesia, multifinance companies aren’t the only financial institutions that offer credit services. Other financial institutions such as banks and financial technology (fintech) companies also provided similar online credit services in recent decades.

See the differences between the three institutions in the following sections.

1. Multifinance

The following are the characteristics of multifinance companies:

  • Sources of funds come from company owners, banks, and the issuance of debt securities to customers.
  • Services provided include loan distribution. They also collaborate with several companies to offer various payment transactions.
  • The types of loans disbursed by multifinance institutions include leasing, business financing, consumption financing, and venture capital.
  • The risk of loan distribution is borne by the multifinance institution.
  • Supervision is only carried out by the OJK.
  • There is no guarantee for customer funds.

2. Banks

Banks are different from multifinance institutions because of the following characteristics:

  • Sources of funds come from savings, deposits, current accounts, owner’s capital, and the issuance of customer debt securities.
  • The services provided are not only lending but also serving various payment transactions and offering investment products.
  • Debtor customers usually include MSMEs, corporations, consumers, and retailers.
  • Banks are responsible for the risks of lending.
  • Banks are supervised by the OJK and Bank Indonesia.
  • Customer funds are guaranteed by the Deposit Insurance Corporation (LPS).

3. Financial Technology (Fintech)

The emergence of fintech companies in recent years has enabled them as an alternative to banks and multifinance institutions. The following are the characteristics that differentiate them from the previous institutions:

  • Sources of funds come from fintech company owners and investors.
  • Fintech functions as an intermediary between fund owners and borrowers.
  • Loans disbursed by fintech can be used to finance business or personal needs.
  • The risk of loan distribution is borne by investors.
  • Fintech is only supervised by the OJK and focuses on consumer protection. If a problem occurs and customers or consumers feel they have been disadvantaged, they can report it directly to the OJK.
  • There is no guarantee for customer funds.

Despite the similar purpose to assist their customer’s financial needs, multifinance institutions are different in so many ways from banks and fintech companies. They’re also different from each other in terms of fund sources.

In short, multifinance institutions are financial institutions that provide funding for customers to buy consumer goods. To give the best service to your customers, your multifinance institution needs to use Multifinance Core Systems CONFINS from AdIns.

CONFINS is a core system platform with high-end features to assist all processes in financing institutions. These features are e-Sign Hub for digital document signing, Credit Score for assessing customers’ creditworthiness, and OCR to simplify the registration process in multifinance companies. Get the demo version of CONFINS by clicking here!

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Published date :

03 August 2023