Publicly listed private lender PT Bank Danamon Indonesia signed on Thursday a loan channeling agreement with financial technology (fintech) platform PT Investree Radhika Jaya. The partnership will focus on small and medium enterprises (SMEs) by tapping into the segment’s growing number of businesses.

With the agreement, Bank Danamon will provide loan funding through the peer-to-peer lender’s (P2P) platform, enabling SMEs to borrow with higher credit limits “as if they are applying through a bank”, Bank Danamon wrote in a statement.

“We are giving our SME borrowers much easier access to their financing needs, and more importantly, we will continue our commitment to supporting the growth of Indonesian SMEs as the backbone of this country’s economy,” Bank Danamon president director Yasushi Itagaki told a press briefing in Jakarta during the announcement.

Indonesia’s approximately 64.2 million micro, small and medium enterprises (MSMEs) play a huge role in the country’s economy as they accounted for 99.9 percent of total businesses in 2018. MSMEs also account for 61 percent of GDP.

Read also: Bank Danamon to get new boss following merger

Bank Danamon vice president director Michellina Laksmi Triwardhany said the partnership would allow the bank to tap into a new customer base, a different market segment than the bank had yet to cater to.

“Danamon usually gives out loans worth Rp 2 billion to Rp 20 billion to SMEs, meanwhile in our partnership with Investree, the maximum loan will be Rp 2 billion,” Michellina said.

The loan channeling scheme will cater to borrowers applying for loans worth between Rp 200 million to Rp 2 billion. The average loan ticket size would be under Rp 500 million, Michellina said.

“This is aligned with our vision because Danamon prioritizes SMEs as one of our engines for business growth.”

As the party who will be in charge of assessing prospective borrowers, Investree will implement several measures as forms of risk mitigation. It will utilize online information networks, for example, e-procurement and artificial technology, to help build its credit-scoring system.

“We are looking into supporting infrastructures for the lending business, [including] SMEs credit-scoring, [which] is something that we are developing as we speak,” Investree cofounder and CEO Adrian Gunadi told the audience at Thursday’s announcement.

Read also: P2P lenders create thousands of jobs, reduce poverty: Study

P2P platforms have contributed Rp 60 trillion to the GDP as of June 2019, primarily through MSMEs, according to a study conducted by local think thank Institute for Development of Economics and Finance (Indef) and the Indonesian Fintech Lenders Association (AFPI).

Adrian said that his Investree had formed partnerships with three banks, including Danamon and two multifinance corporations. These institutional lenders contributed about 30 percent of the total lending portfolio as of December last year. The rest were from retail lenders.

The partnership agreement between Bank Danamon and Investree is the third of its kind as the two parties had joined forces in other initiatives in the past four years, namely on cash finance services and opening savings accounts.

Investree is up and running in three countries, namely Indonesia, Thailand and the Philippines, with almost 2,000 SMEs and 80,000 lenders connected to its platform, Adrian said.