Fintech P2P Lending in Indonesia : Observing the Fintech P2P Lending Business Growth Acceleration

Fintech P2P Lending in Indonesia :

Observing the Fintech P2P Lending 

Business Growth Acceleration

By: Kardi Pakpahan*

If we look at the growth of Financial Technology (Fintech) businesses, especially Peer to Peer Lending or P2P Lending, also known as network loans, it can be said to be in the zone of acceleration, whose growth is above the average of the financial services industry. the other. For example, lending through Fintech P2P Lending in July 2018 amounted to Rp 9.21 Trillion, while in July 2019 the total lending through 127 Fintech P2P Lending institutions has reached Rp 49.79 Trillion. As of July 2019, around 70% of Fintech P2P Lending customers are aged 19 to 34 years.

Several factors contribute to the acceleration of Fintech P2P Lending's business growth. Some of them are put forward in the following description. First, settings. On December 28, 2016 the Financial Services Authority (OJK) has issued OJK Regulation or POJK No.77 / POJK.01 / 2016 regarding Information Technology-Based Money Lending and Borrowing Services. After the POJK was put in place, attention was paid to organizing a relatively large Fintech P2P Lending business and as of July 2019, 127 Fintech P2P Lending businesses had been registered with the OJK. Another arrangement that supports the nature of the Fintech P2P Lending business is POJK No.13 / POJK.02 / 2018 concerning Digital Financial Innovations (IKD) in the Financial Services sector.

Second, licensing. The mechanism of Fintech P2P Lending business licensing activities starts from the registration process at the OJK Fintech Regulation, Licensing and Supervision Directorate, after fulfilling the requirements as specified by POJK No.77 / POJK.01 / 2016, the license is granted by OJK. After being registered with OJK, Fintech P2P Lending can run its business activities.

Third, big capital. Based on data released by the OJK recently, it emphasizes that Indonesia has a large capital to support the development of Fintech. These capital indicators, some of which are a) 52 million people are categorized as middle class, which is also called the phrase consuming class and enjoy demographic bonus in 2030; b) total internet users 150 million or growing 13% (yoy) with penetration reaching 56%; c) the percentage of mobile banking users reaches 61%; d) millennial numbers are increasing, which currently has reached 88 million.

Fourth, OJK's strategic policies. One of OJK's strategic policies in 2019 out of 5 main pillars, which can be said to have supported the acceleration of Fintech P2P Lending business growth is to prepare the financial services industry in the face of the Industrial Revolution 4.0, which is supported by programs: a) digitization of financial products and services; b) Fintech P2P Lending start-up and equity crowdfunding development facilities; c) arrangements that encourage innovation and consumer protection; d) increasing public literacy in fintech; e) law enforcement for start ups.

Fifth, SLIK is not required. As a financial service provider through the provision of loans in the network, Fintech P2P Lending has not been required to follow the Financial Information Service System (SLIK). SLIK is a substitute for SID (Debtor Information System). SLIK is used to check prospective Debtors whether they have non-current loans or problem loans at other financial institutions. Tend to be more prospective borrowers using the Fintech P2P Lending application because they have not implemented SLIK.

Sixth, investor support. Although age is still relatively easy, considering the Fintech P2P Lending growth acceleration, investor interest is relatively large. Of course this is important, because capital for Fintech P2P Lending is like a fourth table leg. For the development of the Fintech P2P Lending business so that it is efficient, and has high performance and competitiveness, it requires relatively large capital.

Accelerated growth of Fintech P2P Lending needs to be maintained so that opportunities open for more members of the public to enjoy financial services and can encourage various economic activities. To maintain or increase the growth of the Fintech P2P Lending business, the parties concerned need to make some efforts. Some of the efforts that are intended will be put forward in the following description.

First, regulatory support. Given the trend of Fintech P2P Lending growth in the future, there is a need for regulation in the Act (UU), which can be realized in the Fintech Law or Credit Law - including loan or credit regulation in the network. With the intended law, in addition to prioritizing the substance of the regulations related to the implementation of Fintech's business, it also accommodates efforts to anticipate and overcome Illegal Fintech practices, which in recent times had troubled the public in various places in the archipelago.

Second, recruitment of superior human resources from banks. Human Resources (HR) in the business structure of Fintech P2P Lending so far, both in the top position (top management) and in the midline of the organization (middle management), and in the first line (first management) does not all have a background from financial / banking services businesses. To maintain or improve business growth, it is necessary to recruit superior human resources who are relatively young and master information technology from banks to help Fintech P2P Lending for the preparation and implementation of business plans / business models, risk control, cost & pricing for the calculation of the imposition loan interest basis so as to get optimal results while maintaining the balance of assets and liabilities.

Third, cooperation between Fintech P2P Lending and other financial service providers. In order to make the presence of Fintech P2P Lending more positive, it is necessary to collaborate with other financial service providers. Collaboration with commercial banks and rural banks (Bank Perkreditan Rakyat), for example, can be realized in the distribution of syndicated loans and credit forwarding patterns (Channeling). Cooperation of Fintech P2P Lending with insurance businesses, for example, can be aimed at providing credit life insurance services or credit guarantee objects insurance.

Fourth, enhancing the quality of customer protection. Both in terms of regulation and efforts of controlling Fintech P2P Lending it is necessary to improve the quality of protection for customers or consumers of Pindar services or Fintech Lending. Relevant to this effort, it is better for the Personal Data Bill to be immediately enacted or enacted. The presence of the Personal Data Act needs to support the protection of Fintech customers, as well as becoming a guideline for the supervisory authority and organizer of Fintech P2P Lending.

Fifth, market expansion. The focus of Fintech P2P Lending marketing so far can be said to be still more dominant on the island of Java. Bearing this in mind, it is necessary to expand markets and providers of Fintech P2P Lending to other regions in the archipelago, to further open wider access to financial services to the public or expand financial inclusion.

Sixth. HR Development. To support and maintain the acceleration of business growth, it is necessary to conduct an HR development program, which is organized by the Fintech P2P Lending company independently or through an association. Not long ago, AFPI (Indonesian Joint Funding Fintech Association) has conducted competency certification training for shareholders, directors and commissioners. To support the development of HR in Fintech P2P Lending companies in the middle line (middle management), AFPI needs to initiate, plan and organize training programs to develop HR competencies in the midfield.

Seventh, increasing the quality of licensing services. To ensure the acceleration of Fintech P2P Lending business growth, it is necessary to improve the quality of licensing services, such as in accelerating the completion of permits starting from registration. If an increase in the quality of licensing can be realized, then investors who are interested in Fintech P2P Lending, both in direct investment or indirect investment activities (such as stock purchases), will tend to be even greater.

Eighth, Fintech P2P Lending financial report standards. In order to create transparency in the operation of the Fintech P2P Lending business, which can therefore increase public confidence, especially Investors, it is necessary to prioritize financial reporting standards. To support this, AFPI needs to coordinate with OJK and IAI for the preparation of accounting standards or Fintech P2P Lending financial reports.

Ninth, balance in maintaining business growth. As a startup, the Fintech P2P Lending business needs to maintain the balance of business development elements, such as financial aspects, customers, internal processes, organizational development, so that sustainability or going concern can be realized. For example, the relatively high growth in business volume, needs to be followed by the realization of a balanced target in the area of ​​profitability ratios, both in terms of Return on Assets (ROA) and Return on Equity (ROE). In the case of accelerating the customer acquisition program, for example, it needs to be followed by a customer retention program, customer value and customer satisfaction. If improving the application platform technology in improving the internal quality of the Fintech P2P Lending business process, it is necessary to maintain a balance between reliability, integration and continuity. For organizational development, for example, when you have received HR, don't forget to develop it. Hopefully

(* Alumnus of the Faculty of Law, University of Indonesia, Advocate, Trainer & Observer Fintech, WA = 0813-2895-0019, IG = kardi_pakpahan)