The Impact of Fintech Services for the Community and MSME Actors in Indonesia

In the last two years, fintech services have developed rapidly, offering options that are currently widely used routinely by the public.

Starting from digital wallets, fintech lending, wealth management, paylater, insurtech, to fintech enablers. In the #TuesdayStartup session, Editor in Chief Amir Karimuddin, the trend and development of fintech services in Indonesia was discussed.

In particular, currently most Indonesians are increasingly accustomed to using digital wallets to paylaters for payments. However, in the last two years, fintech services have also begun to be enlivened with new platforms also known as fintech enablers.

New terms have also emerged, there are open banking, open finance, to banking as a service (BaaS) all of which actually take advantage of the existence of the Open API with different targets.

Especially for enablers, embedded finance or open finance, all focus on the B2B segment. There is a new business that gives color, which is also a keyword in the 2021 Fintech Report.

“This fintech platform with a variety of services, later whether there are in the same house or between platforms can communicate better with each other using the API. In the future, open finance, embedded finance will be more widely applied in various platforms,” ​​said Amir.

He added that to be able to provide seamless services, generally these products are packaged like financial products such as investments and others are included in the options in the marketplace, which establish strategic collaborations with the fintech enabler. In Indonesia, players targeting this industry include Safe, Finantier, and AyoConnect.

Education And Safety

One thing that is also of concern to all parties related to fintech services is to answer the question: what fintech services are needed and suitable for their needs?

So that it will avoid misuse of the platform to offers that are spread freely using social media. Understanding or digital financial literacy needs to be conveyed by many parties, both stakeholders who are directly involved, the media, to the public in general.

For platforms, usually already included in associations, for example AFPI which jointly conducts education.

“In this case, I see not only product literacy, but also digital literacy which must be continuously encouraged, if we see so many people forwarding messages on WhatsApp without verifying the truth for loan and other services, including on social media,” said Amir.

In terms of security, until now there has been no case large enough that harms customers to the platform. All platforms have worked well to protect their users/customers from hackers and other threats.

However, in order to continue to be able to maintain security, all relevant platforms are required to continue to follow the rules imposed by the regulator. Does it maintain the security of user data to user accounts.

Benefits for MSMEs

Fintech services directly benefit MSME actors. those who fall into the micro category, so far do not have complete financial records or bookkeeping and most of them are still done conventionally.

This makes it difficult for them when they want to do business development to get a capital loan from a bank.

As providers of conventional financial services, banks have rules and limitations, making it difficult for them to reach MSME actors who still do not have accurate financial and business data.

In this case, fintech services with KYC processes and other more flexible processes can bridge the banking sector with them.

For example, through a marketplace that stores data on MSME actors, or certain communities that have been reached by financial institutions for financing. Utilizing this process, banks will be able to support MSME players through strategic collaboration with fintech services.

“Fintech has a way to carry out KYC analysis or better screening to ensure that businesses that are difficult to access and avoid by banks can then be reached using fintech services,” said Amir.