Sharia Fintech Value Triple Growth during the Pandemic

Sharia financial technology (fintech lending) companies experienced a surge in demand for Islamic loan services during the pandemic. In fact, the loan value increased threefold. CEO Alami Dima Djani said the most significant increase occurred after the Large-Scale Social Restrictions (PSBB) were relaxed in several regions.

“Maybe because digitalization has suddenly become a priority,” said Dima, Friday (13/11). Last May when several regions implemented the PSBB, Alami only disbursed IDR 9 billion in sharia loans. Then, in October the value of the loan provided by the company was recorded to have increased to IDR 30 billion. “There was a three-fold increase,” said Dima.

The majority of services that many companies provide are factoring products. As the demand for services increases, the company seeks to mitigate risk by providing a rigorous assessment of the MSMEs that will get funding.

Targeting the Indonesian MSME Market

Alami it targets potential MSMEs during a pandemic, such as the groceries and health sectors. To date, the company has distributed more than 1,000 financing and hooked up to nearly 10 thousand lenders (lenders).

Likewise with other sharia fintech lending organizers Ammana. Chief Executive Officer Ammana Lutfi Ardiansyah said the value of loans provided by the company grew 44% during the pandemic.

The total amount of funds disbursed by the company to date has reached IDR 182 billion. Total MSMEs provided with Ammana funding reached 2,148 entities and total lenders reached 4,208. Even so, during the pandemic, Ammana experienced problems in serving financing for Umrah activities.

“Because Umrah is still limited and has not fully recovered, access to finance cannot start normally,” said Lutfi when contacted last Tuesday (3/11). Another sharia fintech lending organizer Dana Syariah also recorded a loan value growth of up to 300% in 2020 on an annual basis (year on year / yoy).

“This means that the sharia-scheme funding enthusiasts have had an extraordinary growth,” he said, CEO and Founder of Dana Syariah Taufiq Aljufri, some time ago. To date, there have been more than 1,100 borrowers (borrowers) who have been successfully granted funding facilities through the Sharia Fund. Meanwhile, the number of lenders reached more than 135,000.

The Potential for Islamic Fintech is Very Large

He sees that the potential for the sharia fintech lending market is huge. Because, not all funding needs can be served by financial institutions, both banks and conventional fintech. “For example, because it does not meet the bank’s administrative requirements, or because the value of the requirement is too small,” he said.

In addition, the potential also comes from a large number of enthusiasts or groups of people who want a sharia financing scheme. Based on the State of The Global Islamic Economic Report, consumption and exports of halal products increased respectively by 3.6% and 19.2% in 2017. Domestic Islamic financial assets also reached US$ 82 billion or around IDR 1,155 trillion, entering the top 10 world in 2018.

“Sharia fintech can contribute to the growth of Islamic financial services with its technological capabilities,” said the Lead Research Economist of Islamic Development Bank Mohammed Obaidullah at the Indonesia Fintech Summit 2020 on Thursday (12/11).

Moreover, according to Obaidullah, during a pandemic, massive digitalization was carried out, including for financial services. This makes the potential for Islamic fintech even greater. Last year, Vice President Ma’ruf Amin said the contribution of Islamic finance to the total financial industry only reached 8.69% in 2019.

According to Ma’ruf, research result projects that global Islamic financial assets will reach US$ 3.9 trillion by 2023. “The digital economy will open up opportunities to increase the market share (of Islamic finance) in Indonesia,” said Ma’ruf in Jakarta. in September last year.

He said, in 2019 Indonesia already has the most sharia fintech in the world, reaching 31 companies. Followed by the United States (US) with 12 sharia fintechs and the United Arab Emirates (UAE) with 11 sharia fintechs.