Biggest Player in the Industry

BMT UGT Sidogiri began its official operation in 2000 but its origins date back to 1997 when some teachers of a local Sidogiri boarding school came together to help local traders get away from local loan sharks. Their loan scheme was designed such that at the end of the debt repayment, the borrower had a saving fund to sustain the business. The locals began borrowing from them and the project was then taken over by some alumni who took it forward as a legal entity of a cooperative. Today, BMT UGT Sidogiri is the largest cooperative in Indonesia with 280 offices spread across the country. They reported total assets worth IDR 2.254 trillion in 2018. The BMT has claimed many awards along with international certifications for quality management.

Original Initiative Intact Through Expansion

The school’s alumni are still part of the recent management as it is part of the cooperative’s mission. The cooperative has expanded its business in many streams insurance brokerage, Islamic rural banking, ICT business, tour and travel, human resource training and Palm plantation. The BMT ranks high on social performance. In contrast to other BMTs, UGT Sidogiri offers returns on all saving products on mudarabah-musharakah contract (profit-loss sharing). As a large BMT, UGT Sidogiri offers diversity in its financing products as well. However, despite being a large scale cooperative, financing products are still tailored to meet the needs of borrowers.

Key to the Success of UGT Sidogiri

The personalized financing products seem to be at the core of the success of the BMT model in Indonesia. They also offer higher loan ceilings going up to IDR 500 million. Moreover, they collect zakat (obligatory charity) and other funds from the members to be distributed to the very poor. Another feature unique to this BMT is a transaction mobile app. Members are incentivized to use the app for their transactions. UGT Sidogiri has gone to the extent of forming mobile cashier teams to facilitate payments. The teams visit the members at their business place to conduct transactions. UGT Sidogiri also offers higher rations than other BMTs, adding to its large member base. UGT Sidogiri has introduced several innovative products like Si-Mantab savings which provide various benefits for depositors such as the opportunity to get free Hajj and Umrah (pilgrimages), insurance benefits, etc.

Ready to Embrace a Fintech Future

Despite the success, UGT Sidogiri is cognizant of the challenges ahead. Most importantly, that new technology has the potential to change the playfield for these BMTs. UGT Sidogiri is actively exploring options to embrace the digital finance era. It is experimenting on collaboration models with banks to facilitate its members to use their ATM network.

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