Fintech Lending: Challenge and Opportunities of the Indonesia’s Loan Unbanked to Develop the Inclusive Financial Industry (original) (raw)

Regulating Fintech Lending in Indonesia: A Study of Regulation of Financial Services Authority No. 10/POJK.05/2022

Qubahan Academic Journal

POJK 10/2022 was issued by the Financial Services Authority to replace POJK 77/2016 with a new nomenclature. The difference in name certainly has implications for the substance or content of the regulation. The purpose of this study is to explain the regulation of fintech lending in POJK 10/2022, which replaces POJK 77/2016. This is normative juridical research, which uses a statutory approach to conceptualize law as a norm or rule that applies and becomes a reference for people's behavior. The data sources come from secondary data. According to the findings of the research, the regulation of fintech lending in POJK 10/2022 is more comprehensive than that in POJK 77/2016. Several articles contain new provisions, such as those concerning sharia funding for fintech, provisions for recipients of invoice defaults, and supervision of fintech lending, though several provisions in these articles remain unchanged from the previous regulations. POJK 10/2022 vastly improves on POJK 77/201...

Catching up with Indonesia’s fintech industry

Law and Financial Markets Review, 2017

The innovative use of technology in finance is posing challenges to many traditional business models. At the same time it is challenging regulators. The key issue they face is how to balance the desire to encourage new businesses so as to intensify competition and provide better customer services in the sector, while protecting the system and consumers from excessively risky behaviour and potential disruption. For Indonesia the opportunity is very large given the uneven availability of finance and low levels of financial inclusion. This paper explores the new Indonesian regulation of platform lending in the light of standard regulatory problems, international experience with regulating the sector, and the particular needs of Indonesian development. We find it is close to best-practice regulation. B. Platform (P2P) lending P2P lenders act as brokers, matching investors with borrowers, and made feasible by fintech. Compared to traditional brokerage activities, digital and communications technology enables: electronic contracting; divisibility of loan contracts across many lender/investors; investor diversification; use of more information in credit assessment and risk-based loan pricing; and algorithmic methods for matching multiple borrowers and lenders and determining interest rates involved. Compared to traditional banking, P2P operators do not take on credit risk (the investors do) and, by matching investors with borrowers, do not provide investors with liquidity nor take on interest rate risk (again, the investors do).

Indonesian Fintech: Business Ecosystem and Regulation

Diponegoro Law Review

This article will examine the development of the business ecosystem and regulation of Financial Technology (Fintech) in Indonesia, especially lending through electronic transactions, or peer to peer lending (P2P Lending). Although the Financial Services Authority (OJK) has closed the company's activities, but in a short time other illegal companies have emerged, even in larger numbers. This research uses the doctrinal method with the statutory approach. Secondary data is used to explain of legal and social phenomena related to the research topic.The Fintech industry requires specific provisions governing criminal offenses related to Illegal companies.

The Problems of Consumer Protection in Fintech Peer To Peer Lending Business Activities in Indonesia

Sociological Jurisprudence Journal

Industrial Revolution 4.0 has influenced the development of technology and information. The presence of financial technology (fintech) especially fintech peer to peer lending in Indonesia is proof that the Industrial Revolution 4.0 has had an influence on economic aspects as a fundamental aspect of the country. The implementation of fintech peer to peer lending in providing alternative financing to consumers is currently faced with several problems, especially issues related to consumer protection. This study uses a normative legal research method with a statutory approach. This research shows that the state has tried to provide preventive protection to consumers through several regulations, namely Bank Indonesia Regulation Number 19/12/PBI/2017 concerning the Implementation of Financial Technology that regulates the procedures for implementing fintech in Indonesia and also the OJK Regulation Number 77/POJK.01/2016 on Information Technology-Based Lending and Borrowing Services that ...

Consumer Protection in Lending Fintech Transaction in Indonesia: Opportunities and Challenges

Journal of Physics: Conference Series, 2020

Currently, lending fintech is proliferating. It is because of the high financing needs of the people who have not been reached by the banks. The existence of lending fintech is getting stronger with the issuance of the Financial Service Authority Regulation Number 77 of 2018 concerning Information Technology-Based Money Lending and Borrowing Services. Until August 2019, there were 127 lending fintech registered in the Financial Service Authority. Unfortunately, there is still a problem concerning protecting consumers who make loan transactions with fintech companies, along with the rise of illegal fintech companies. Therefore, this paper tries to analyze the potential development of lending fintech in Indonesia, along with its opportunities and challenges. The study of this research uses normative juridical. This paper concludes that the current regulation is still not enough in providing legal protection to consumers in conducting the transaction in lending fintech. Therefore, it i...

The Self Regulation on Peer to Peer (P2P) of Lending Industry in Indonesia as Problems and Prospects

Jurnal Pembaharuan Hukum, 2022

The purpose of this research is to find out that the industrial revolution 4.0 has had a significant impact, especially in the use of technology and the internet in daily human activities, both in personal life and in economic activities. This study used a normative legal research method that examines various legal theories related to financial technology both in Indonesia and other countries. The P2P lending service carries out business activities by providing, managing, and operating money-borrowing services by utilizing information technology as a liaison. Peer to Peer (P2P) Lending in Indonesia is regulated in POJK No. 77/POJK.01/2016 concerning Information Technology-Based Lending and Borrowing Services. This regulation is the basis for the implementation of P2P Lending business activities or online borrowing, which is one type of fintech, including regulations regarding supervision carried out by the Financial Services Authority (OJK) on the implementation of these business activities. However, in practice, lending by P2P Fintech has attracted a lot of controversies because there are still many problems, including interest arrangements, the rise of illegal fintech applications and also the weakness of consumer protection where these things have not been fully addressed and regulated by POJK No. 77/POJK. 01/2016.

Detection of fintech P2P lending issues in Indonesia

Heliyon

Financial technology (fintech) is a growing industry in Indonesia, supported by advances in the technological infrastructure. At the end of 2019, the Financial Services Authority (OJK), the financial authority in Indonesia, recorded 164 registered and licensed fintech (P2P lending) companies. However, since early 2018, the Investment Alert Task Force (SWI) and the Ministry of Communication and Information Technology have blocked 1,350 illegal fintech platforms. Illegal fintech lending practices have mechanisms beyond the responsibility and authority of the OJK, including the risk of collection and distribution of personal data. The essence of this study is to discuss the landscape of fintech P2P lending in Indonesia from Indonesian Online News data, explore cases of fintech p2p lending in Indonesia, and understand the rules and policies. Qualitative research with a case study approach and Focus Group Discussion techniques were used to obtain data from 4 stakeholders in the Fintech P2P Lending Industry in Indonesia. VOS Viewer software is used to build keywords from Indonesian Online News collections, NVIVO 12 qualitative software is used to assist data analysis. The research found the keyword clusters most frequently discussed in the Indonesian Online News collection and five case themes such as public awareness about P2P lending (user understanding), data leakage, and restriction of data access, including personal data protection, personal data fraud, illegal fintech lending, and Product marketing ethics.

The Conception of Sharia Fintech Lending and Its Regulatory Preparedness in Indonesia

Indonesian Journal of Islamic Economics and Finance

This study aims to describe the concept of Sharia Fintech Lending and its regulatory readiness in Indonesia. Along with the development of technology and online lending issues that are troubling the public, sharia fintech lending grows and develops. However, the challenges of online lending make this industry little known to the public, so its development tends to be slow. In quantitative terms, this industry is not as much as conventional fintech. Therefore the government (OJK) initiated regulations for this industry supported by the DSN MUI Fatwa. However, after it was implemented, it turned out that there were many obstacles that hindered the growth of sharia fintech lending. Based on the research findings, OJK needs to review this regulation to make it more flexible and support the development of Islamic banking fintech more rapidly

The Urgency of Revising the Finance Services Authority Regulation Number 77/POJK.01/2016 As an Umbrella Law in Practicing Peer to Peer Lending Based on Financial Technology in Indonesia

Pandecta: Research Law Journal, 2021

A BSTRACT The presence of Peer to Peer Lending Based on Financial Technology (Fintech) in Indonesia is a real manifestation of a technological advancement. The advantage of technology is its simplicity, but like two sides of a coin, technological advances in financial services also cause polemics and problems. Based on complaints received by the Financial Services Authority, there are 2 things that are often complained about by borrower, it is regarding the unwise use of private data that is used as a way of collecting debt by peer to peer providers and the way they contact borrower for collecting debt. Even though it is considered controversial, the growth of fintech service providers has accelerated to 200%. These are show the urgency that the Financial Services Authority Regulation No.77/POJK.01/2016 requires revision because it is not in suitable with the current development of Fintech. The Financial Services Authority Regulation No.77/ POJK.01/2016 requires revisions regarding ...

Financial Technology: Legal Challenges for Indonesia Financial Sector

IOP Conference Series: Earth and Environmental Science

The global financial services sector is transforming as technology advances. Various types of technology based innovative financial business models or financial technology (fin-tech) are growing rapidly around the world, including Indonesia. The Financial Stability Board (FSB) incorporates the fin-tech progress in its work plan in 2017 in the perspective of financial stability. In Indonesia, the Financial Services Authority has issued the Financial Services Authority Regulation No: 77 /FSAR.01/ 2016 on Technology-Based Lending and Borrowing Services to provide a legal basis for fin-tech activities, in particular services with peer to peer lending models. In practice, fin-tech in Indonesia is not only used to facilitate lending and borrowing, but also used for other business models, especially start-up business, investment and social activities, which are not included in the scope of lending and borrowing. On the other hand, fin-tech development in Indonesia is expected to contribute to economic development, particularly in facilitating micro, small and medium enterprises to gain access to finance. The advantages of fin-tech include cost efficiency and ease of access to finance, but on the other hand there are some obstacles and risks that potentially arise, such as credit risk, insufficient technology, misuse of funds and user/consumer data and protection of national interests such as money laundering as well as disruption to monetary stability. Therefore, in addition to the need for comprehensive regulation, supervisory aspects by the financial services authorities are urgently needed to make fin-tech a part of the financial services sector.