Startupreneur Bisnis Digital (SABDA)

Vol. 1 No. 1, April 2022

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E-ISSN:
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Fintech As A Financing Solution For Micro, Small

and Medium Enterprises

Sabda Maulana1*, Iskandar Mustofa Nasution2, Yamato Shino3, Arop Ria S.Panjaitan4
1 Information System, University of Raharja, Indonesia
2 Field of study, Bakrie University, Indonesia
3 Information Technology, University Of Miyazaki, Japan
4 Management, Esa Unggul University, Indonesia

Email: sabda@raharja.info, admisi@bakrie.ac.id, yamatoshino@yahoo.com, ria.panjaitan@essaunggul.ac

Article Info ABSTRACT

DOI:
In 2020, more than 50 new fintech companies were formed, this
10.32812/jibeka.vXiX.XXXX
financial business competed with 140 other startups that had
Article history: previously been in the Indonesian financial scene. This research
will focus on how fintech can become a prima donna that grabs
Notifications Author the attention of many financial industry players, using the
19 April, 2022 literature review method we will compare previous studies as a
Final Revised reference. Fintech startup investments are in great demand,
22 May, 2022 even some startups have received series A funding this year.
Published Fintech is just getting started, and there are a lot of new
25 May, 2022 products coming out. Meanwhile, the Office of Cooperatives and
Small and Medium Enterprises (Small and Medium Enterprises)
has released 3.81 million Small and Medium Enterprises
Keywords: (SMEs) which are now using web-based platforms to advertise
their goods. This accounts for about 8% of the total 58.9 million
Fintech small and medium-sized organizations in Indonesia. Lack of
MSMEs access to capital is a long-standing problem that hinders the
Finance growth of SMEs that do not have access to bank finance. SMEs
cannot create innovations to increase output due to lack of
financial resources. However, the increasing expansion of the
fintech financing business, such as peer-to-peer lending, opens
up other options for lenders. Peer-to-peer lending is a type of
loan that focuses on the lower-middle market segment.
This is an open access article under the CC BY 4.0 license.

Corresponding Author: Sabda Maulana

Information System, University of raharja, Indonesia
Email: sabda@raharja.info

1. INTRODUCTION
Limitless mechanical advancements in the present computerized time, are more
finished with the presence of fintech. The term fintech is a monetary assistance by utilizes

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an innovation base which obviously will make our exchanges simpler anyplace and
whenever [1].

Figure 1. fintech illustration

Fintech models As of late, fintech was initially begun in 2004 by Zopa, which is a
monetary organization in the UK running credit administration cash. Then continue with
Bitcoin started by Satoshi Nakamoto in 2008. Monetary innovation (FinTech) is
transforming into a bigger field of the Web of Things (I0) and will be changed dramatically
in the approaching ten years by quantum figuring. New resource classes and innovations
are being made that will adjust current strategic approaches [2]. As a type of innovation
application data in the monetary area. Fintech has different capacities, which are accepted
to be prepared to do quickly developing. As of now, fintech can serve electronic cash, virtual
records, aggregators, loaning, crowdfunding, and other internet based monetary exchanges
[3]. As for fintech that has been operating, some of them were founded by based companies,
but not a few are start-up companies or startups. However, the development of fintech in
Indonesia remains under the supervision of Bank Indonesia (BI) as the central bank [4].
The innovations that develop here are an adaptation of computer network principles
applied to finance. Even at the beginning of this Peer to Peer financial concept intended for
start-ups (entrepreneurs) new in seeking investors to finance their business [5]. But in its
development Peer to Peer finance has become crowdfunding, so that financial utilization
Peer to Peer is not limited to start-ups. With the emergence of the financial innovation,
virus Internet-based P2P network then, Of course, the spread is very fast globally until it
finally appears various crowdfunding services in Indonesia such as www.kitabisa.com,
www.ayopeduli.id, www.hasilkan.com Etc. This was likewise expressed by Paul Schulte
and Gavin Liu in his examination which introduced in his article entitled Fintech is
Converging with IoT and computer based intelligence to Challenge Banks: How Dug in
Intrigued Can Plan, they stated: "Alibaba, for instance, can quickly create in internet
business and go about as the foundation of banks on account of beneficial items from its
cloud business, which houses billions of advanced information on clients. Subterranean
insect Monetary can have a worth of $59 billion and proposition credit scores on 850
million individuals and 20 million little and medium-sized ventures (SMEs), testing
conventional rating organizations" [6]. Therefore, the law must play a role in anticipating
problems that arise from this FinTech innovation product. One of them is about the legality
of the implementation of crowdfunding. Then, what is the business model? This FinTech
be free from illicit money (money laundering)? It is these legal issues that are still in the
grey area according to positive law in Indonesia. Joseph Schumpeter (1934) argued with
his theory of creative destruction that values entrepreneurship will give rise to new markets
through a new method. If Schumpeter banged with instrument law, then of course the law
cannot pursue the dynamics of a very running business [7]. Currently, FinTech is not only
known only among entrepreneurs but is already well known by society in general.
Utilization This FinTech, of course, needs to be addressed immediately through good legal

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instruments. One of the fastest-growing Fintech phenomena is the existence of online

transportation such as Go-Jek through its Go-Pay, Grab with GrabPay, and so on. The
impact of Go-Jek is booming because its existence threatens the conventional
transportation business. If the FinTech phenomenon is equated with the Go-Jek
phenomenon, then it doesn't close probably in the next 2-3 years. Fintech can dispose of
the job of banks or monetary establishments in offering monetary types of assistance to
clients, assisting clients with settling on monetary choices, decreasing functional expenses
and hazard of misfortune, for instance, because of terrible credit, and fostering the market
[8], [9]. However, some policies are still a concern, namely data security, electronic hand,
know your organization, digital business, payment electronification, and legal certainty of
online-based loans. In line with these developments, many e-commerce trends in Indonesia
are also predicted to continue to increase from Rp 150 trillion in 2014 to Rp 210 trillion in
2025. The situation of e-commerce in Indonesia is potentially the market is huge, but
unfortunately financial infrastructure and delivery are still not enough[10].

2. Literature review
2.1. Financial Technology (Fintech) Definition of Fintech
The expression "fintech" is gotten from "finance innovation" or "monetary
innovation." Fintech is characterized as "development monetary administrations" or
"advancement in fintech monetary administrations" by The Public Computerized
Exploration Place (NDRC) in Dublin, Ireland. An advancement in the monetary business
consolidates contemporary innovation [11]. Fintech exchanges incorporate installments,
ventures, cash credits, moves, monetary plans, and monetary item correlations. There are
presently 142 fintech organizations that have been perceived. In the present advanced
period, the monetary innovation area (fintech) is one of the methods of monetary
administrations that is developing conspicuousness. Advanced installments are one of the
FinTech business quickest developing sections in Indonesia. This is the area that the public
authority and the overall population most need to see fill to extend the quantity of people
with admittance to monetary administrations [12].

2.2. The Role of Fintech

Fintech with monetary administrations, for example, crowdfunding, versatile
installments, and cash move administrations is causing an upset in the new company.
With crowdfunding, it is not difficult to get assets from everywhere the world, even from
individuals you have never met. Fintech additionally permits worldwide or global cash
moves [13]. Installment administrations, for example, PayPal consequently change cash
trade rates, so those in America can undoubtedly purchase products from Indonesia,
Fintech additionally plays a significant part in changing shopper conduct and assumptions
including Can get to information and data whenever and anyplace, Summing up huge and
private ventures so they will quite often have elevated standards in any event, for
independent companies that are simply being constructed. All around the world, the
Fintech business keeps on developing quickly. It is obvious from the rise of new businesses
in this field and the huge worldwide interest in it. Particularly in Indonesia, this business
is becoming quickly to draw in the consideration of all money managers in Indonesia[14].

2.4. Global Fintech Development

Universally, fintech shows that fintech is filling quickly in different areas, beginning
from installment new businesses, loaning, monetary preparation (individual accounting),
retail speculation, crowdfunding, guarantors, monetary examination, and others.
Indonesian FinTech players are as yet prevailing in the installment digital business (40%),
advances (15%), and the rest are as aggregators, crowdfunding, and others.

2.5. Inclusive Finance

After the 2008 Financial emergency, financial incorporation turned into a pattern,
inferable from the effect of the emergency on bunches at the lower part of the pyramid
(sporadically low earnings, living in distant regions, individuals with incapacities, laborers

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without legitimate character records, and underestimated networks) who are by and large
unbanked and have high rates outside created nations [15]. Even though they belong to
the bottom of the pyramid and do not have savings, it can be trusted that they still have
unproductive movable objects (holdings) that are used daily such as rings/necklaces, etc.
that can be cashed and used for productive things such as for non-formal micro-business
capital or farming and raising livestock, etc. Even at this thought sometimes they forget.
Cashing the holding is expected to be one way to solve the problem. Especially if they are
helped and nurtured. For some people, this may be impossible to do [16]. Indeed, creating
a lower-class society (at the bottom of the pyramid) is more difficult than creating an upper-
class one (middle and high income). They have a restricted, narrow perspective and are
unconcerned about the future, preferring to take shortcuts. They need to be nourished in
these conditions because they contain a force that has to be straightened up for future life.
This negative mindset must be eradicated in order for them to become self-sufficient
communities based on their abilities [17].

2.6. Understanding MSMEs

MSMEs or commonly known as small and medium enterprises is a term that refers
to a type of business that is established by individuals and has a net worth of at most Rp.
200,000,000.00 (not including land and buildings).
Based on Law Number 20 of 2008, the definition of Micro, Small, and Medium
Enterprises (MSMEs) is
1. Another word for a business entertainer is a business visionary (business venture).
In basic terms, business venture can be characterized as a business visionary who
can see valuable open doors by looking for reserves and different assets expected
to chip away at these open doors, thinks for even a moment to face challenges
connected with the execution of the business he is occupied with, and maintains
the business with a development and extension plan.
2. What is implied by little and medium undertakings are business exercises with a
size of action that isn't excessively huge, the board is still exceptionally basic, the
accessible capital is restricted, the market that is reached isn't at this point
boundless.
3. Micro-endeavors are useful organizations claimed by people and additionally
individual business elements that meet the models for miniature ventures as
specified in the law of this regulation.
4. Medium business is a useful financial business that remains solitary, which is done
by people or business elements that are not auxiliaries or parts of organizations
that are claimed, controlled, or become a section either straightforwardly or in a
roundabout way with private companies or enormous organizations with all out
resources. net or yearly deals results as managed in this regulation. The digital
business world is miniature ventures, limited scope organizations, medium-sized
organizations, and huge organizations that do monetary exercises in Kudus and
are domiciled in Kudus.
5. A private venture is a useful financial business that works freely and is worked by
people or business substances that are not auxiliaries or parts of organizations that
are claimed, controlled, or become a piece of a medium or huge business, either
straightforwardly or by implication, and that meets the independent company
models as characterized by this regulation.

3. METHOD
The research method used is a descriptive analysis using a qualitative approach.
The data collected is secondary data by conducting literature and literature studies.

Tabel 1. MSME Criteria

No Business Asset Criteria Turnover Criteria

1 Micro business Max. 50 million Max 300 Million

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2 Medium Enterprise > 50M–500M > 300 Million – 2.5 Billion

3 Small business > 500 million–10 billion > 2.5 Billion – 50 Billion

Tabel 2. Previous Studies

No Name Method Title Result

1 Fitri Nuraini, Rieska Literature Strategy to Increase The role of MSMEs is very important
Maharani, Andrianto Review the Competitiveness of in creating job opportunities for the
SMEs and community and contributing to the
Cooperatives in Facing export of non-oil and gas products
the AEC (Asean that can increase the country's
Economic foreign exchange income.
Community): A
Qualitative

2 Novia Nengsih Qualitative Banking Role Sharia in Banking growth Sharia seen from the
Implementing Finance increase assets, Third Party Funds
Inclusive In Indonesia (TPF) rose 15% to 45% per year,
financing too Experience Increase
Which Significant Reach 50.05% per
year

3 Nofita Wulansari, Qualitative Acceleration The role of MSMEs in Indonesia is an

Wahyu dan Yunus Economic growth important point in encouraging
Kurniawan Through Synergy economic growth. UM KM is able to
MSMEs and Good survive and save the nation's
Governance In economy when there is a crisis
Indonesia

4 Budi Wibowo Qualitative Analysis Regulation Presence Service finance based on

Fintech In Building technology (FinTech) in Indonesia
Economy in Indonesia has become a necessity in line with
develop and information and
communication technology.

5 Muhammad Qualitative Linkage Financing business strategy with do linkage

Said Hannaf, Wimpi G And Management Risk financing in the fintech industry is
ea Seprina Putri based on Social form of financing sustainability
Capital in Financial efforts as well as solutions to
Technology: Strategy financing problems consumptive and
Enhancement trapped pattern financing using the
Financing Inclusive contract murabahah.

4. RESULTS AND DISCUSSION

Development of MSMEs in Indonesia Based on data compiled from the Ministry of
Cooperatives and MSMEs, the number of MSMEs from 2009-2013 is as follows:
1. 2009 the number of MSMEs is 52,842,620 units with a share of 99.99%
2. 2010 the number of MSMEs 54,231,922 units with a share of 99.97%
3. 2011 the number of MSMEs is 54,901,430 units with a share of 99.99%
4. 2012 the number of MSMEs is 55,193,199 units with a share of 99.99%
5. 2013 the number of MSMEs was 57,919,561 units with a share of 99.99%
Even in 2014-2016 the number of MSMEs in Indonesia has reached more than
57,800,000 units and in 2017 the number of MSMEs is estimated to grow to more than
58,000,000 units [18]. This was also conveyed by the President of the Republic of Indonesia
Joko Widodo that MSMEs that had high resilience would be able to support the country's
economy, even during a global crisis [19]–[21]. President Jokowi really hopes that MSME
actors will be at the forefront of building the people's economy.
The existence of MSMEs has now become the backbone of the Indonesian and
ASEAN economies. Around 87.8-99.7% of business forms in ASEAN are MSMEs with an
absorption workforce reaching 52.7-97.3%. MSMEs have a proportion of 99.97% of the

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total business actors in Indonesia or 56.53 million units. This is where the need for
cooperation for the development and resilience of MSMEs needs to be prioritized [22].
The improvement of the capability of MSMEs in Indonesia can't be isolated from
banking support in loaning to MSME entertainers. As per information from Bank
Indonesia, consistently credits to MSMEs experience development. Albeit in 2015, around
60%-70% of the whole MSME area didn't approach supporting through banking. Bank
Indonesia has given guidelines expecting banks to assign credit/supporting to MSMEs
beginning in 2015 at 5%, 2016 at 10%, 2017 at 15%, and the finish of 2018 at 20%. In
this time of globalization, everybody should contend to run MSMEs and jump all over
existing business chances. Thus, great business monetary game plans are expected to help
its manageability [23].

4.1. The development of Fintech Startups in Indonesia

Monetary innovation or Fintech has filled quickly in Indonesia. Shared loaning
(P2PL) is a Fintech stage that offers online capital advances or funding. Aside from being a
web-based store supplier, distributed loaning (P2PL) additionally has an assignment,
specifically risk investigation. The enormous requirement for assets in Indonesia makes
the distributed loaning stage grow quickly contrasted with other Fintech stages [24]. A
portion of the Monetary advancements with shared loaning stages that overwhelm in
Indonesia are as per the following:
1. Amartha
Amartha is a Fintech company that also brings together small entrepreneurs or
SMEs with investors. The Marketplace function is also implemented in Amartha. Financing
at Amartha starts with a nominal value of IDR 3,000,000 to IDR 10,000,000. Amartha has
received funding from the largest investor in the amount of Rp. 26,000,000,000. The joint
venture system is a system that distinguishes Amartha from Fintech companies in
Indonesia [25]. System joint responsibility, that is, when there are 10 to 20 people who
have been fostered or mentored by Amartha in various villages, then Amartha will provide
capital or financing, if one member cannot fulfill his obligations, the other members will
bear the responsibility of the members the group.
2. Invested
Contributed is one of the commercial centers, where contributed just cycles assets
from financial backers by uniting them with borrowers on the site, later the financial
backers themselves will pick the borrowers to be subsidized. The largest financing offered
by the invested for the benefit of individual customers is up to Rp. 50,000,000 while for
business purposes up to Rp. 2,000,000,000. Investments provide loan interest of 0.9% per
month and returns for investors of up to 20% per month.
3. My Modal
Modalku is a web-based advance with a shared loaning (P2PL) stage. Modalku is a
stage that gives supporting help to SMEs who are encountering monetary hardships. The
loan funds offered by Modalku start from Rp. 50,000,000 to Rp. 500,000,000 with a tenor
of 3 to 12 months. The system used in SME financing by Modalku is by collecting funds
from investors, if the application for funding by SMEs has been approved by Modalku, then
Modalku will collect funds. The amount of funds that has been collected is needed by
Modalku, then the funding can be immediately disbursed. If the funds needed by SMEs
have not been met as well, then the next step will be carried out.
Of the three distributed loaning new companies that overwhelm in Indonesia, as
portrayed above, they are more centered around SME funding and more on the commercial
center. Nonetheless, there are still a great deal of shared loaning new businesses in
Indonesia that additionally serve customer credits [26]–[28]. The blossoms he gives differ
from level blossoms to dynamic blossoms. These shared loaning new companies
incorporate Uangteman.com, tantalite, and amar bank. The quantity of Fintech in 2016
delivered by OJK in the press (2016) has arrived at 165 organizations or new businesses.
This mirrors the extremely quick development of new companies in Indonesia. In only 2
years, new businesses have developed and overwhelmed the loaning market in Indonesia.
Aside from shared loaning, there are as yet numerous Fintechs in Indonesia, to be
specific internet business crowdfunding. Internet business is a fintech organization that is

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occupied with trading on the web. The stage is explicitly utilized for commercial centers.
Next is crowdfunding, which is a fintech that is like shared loaning, however the thing that
matters is that crowdfunding will gather assets from financial backers first prior to
dispensing advance assets to clients whose advance applications have been supported. Not
quite the same as distributed loaning is a web based loaning stage that quickly dispenses
advance assets to supported advance candidates in the wake of going through the credit
scoring process.

4.2. The Important Role of Startup Financial Technology in Financing MSMEs in

Indonesia
In the current era of digitalization, all activities require the use of technology for
cost efficiency. Digital business in the financial sector makes financial sector institutions
compete to increase financial technology innovation to increase efficiency and market
share. Banking is the most aggressive institution in implementing and developing financial
technology (fintech). The aim is none other than to increase efficiency in serving its
customers.
As another supporting model which is the aftereffect of a blend of monetary
administrations and FinTech innovation, it has changed the plan of action from ordinary
to direct, which at first needed to pay eye to eye and convey a specific measure of money,
presently having the option to complete distant exchanges by creating installments that
can be made in a moment. simply an issue of seconds.
FinTech shows up as individuals' way of life changes, which are right now
overwhelmed by clients of data innovation, which requests a quick moving life. With
FinTech, issues in trading exchanges and installments, for example, having opportunity
and willpower to search for products to shopping places, to banks/ATMs to move reserves,
hesitance to visit a spot due to terrible administrations can be limited. As such, FinTech
assists with purchasing and offer exchanges and installment frameworks to be more
proficient and efficient yet powerful.
It is undeniable that the existence of FinTech can certainly move the joints of the
economy. Through various creativity and innovations, FinTech is developed by
entrepreneurs to answer market needs and market access in the financial sector.
Currently, there are two FinTech regulatory models, namely: rule-based and principle-
based. An example of this regulatory principle when it is formulated into the rule of law is
rule-based (rule-based regulation). For example, the funds collected from the public cannot
be more than 100 billion. While the other principle is the Principle-based (principle-based
arrangement). For example, funds raised from the community must not cause an economic
impact. Apart from the advantages and disadvantages of the two types of arrangements
above, in essence, the rules are made to regulate the situation towards the ultimate goal
of justice in the financial sector. FinTech guideline today is a worldwide interest for the
monetary digital business. Right now, the issue looked by created nations and non-
industrial nations like Indonesia is something similar, in particular how to foster FinTech.
This implies that the level-battleground likenesses among created and non-industrial
nations ought to be a chance for non-industrial nations to find guidelines. It is trusted that
later on the development of FinTech in Indonesia can foster well and securely.
In Indonesia, guidelines in regards to FinTech have been obliged by the Financial
Services Authority Regulation Number 77/POJK.01/2016 concerning Information
Technology-Based Lending and Borrowing Services and Regulation Number
31/POJK.05/2016 concerning Pawnshops. This demonstrates that the Government of
Indonesia has viewed in a serious way the advancement of FinTech in Indonesia. With
guidelines that oblige, obviously, it will make lawful conviction and a feeling of safety for
financial backers and asset searchers. The standards gave by Bank Indonesia through
Bank Indonesia Regulation Number 18/40/PBI/2016 concerning the Implementation of
Payment Transaction Processing are made to help the execution of FinTech and E-
Commerce in Indonesia. This BI guideline manages a few things in regards to the
convenience of FinTech and E-Commerce developments, shopper security and solace as
well as keeping up with the value of FinTech industry players in Indonesia.

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Notwithstanding guidelines, obviously, there are different viewpoints that should

be considered by the FinTech business players in Indonesia. In principle, there are 6 legal
aspects that need to be considered in developing FinTech business in Indonesia, namely
Licensing; Articles of Association of the Company; Agreement/Contract; Proof of Asset
Ownership; Legal and Tax Disputes. By paying attention to these six things, FinTech
business development in Indonesia can run well. The advantages of FinTech can be felt by:
1. For FinTech players (item or administration brokers), FinTech gives the advantages
of working on the exchange chain; Diminishing functional expenses and capital
expenses, and freezing the progression of data.
2. For shoppers, FinTech gives benefits, like better assistance, more decisions; and
lower costs.
3. For the Public authority, FinTech gives advantages to empowering the transmission
of monetary arrangements, speeding up cash flow to work on the local area's
economy, and empowering the Public Procedure for Monetary Incorporation.
As a result of this effectiveness and efficiency, FinTech has changed the payment system
in society and has helped start-up companies to reduce capital costs and high operational
costs at first. Therefore, FinTech is now able to replace the role of formal financial
institutions such as banks. Even as a new payment system, FinTech has played a role in;
1. Become an instrument for installment, settlement, and clearing.
2. Aiding the execution of more productive speculation.
3. Provide a business opportunity for business entertainers, particularly MSMEs who
depend on computerized media as their promoting base.
2. Helping those deprived to save, acquire reserves and put resources into capital.
3. Mitigation of dangers from regular installment frameworks.
The strong flow of technology in the payment system is what drives Bank Indonesia
as the central bank of the Republic of Indonesia to ensure that payment traffic that has
been penetrated by technology continues to run in an orderly and safe manner and
supports the pillars in achieving the vision and mission of Bank Indonesia. Bank
Indonesia's policy in maintaining, payment traffic orders related to FinTech are as follows:
1. In terms of investment funds, advances, and value cooperation, Bank Indonesia
requires each business entertainer to agree with macroprudential guidelines,
extending of monetary business sectors, installment frameworks to help tasks, and
network safety to protect buyer information and data.
2. In terms of giving a market to business entertainers, Bank Indonesia guarantees
assurance for customers, especially in regards to the assurance of the classification
of buyer information and data through digital protection organizations.
3. In terms of installment, settlement, and clearing, Bank Indonesia guarantees
assurance for customers, especially in regards to ensures for the classification of
buyer information and data through digital protection organizations.
2. In terms of speculation and chance administration, Bank Indonesia likewise
requires each business entertainer to consent to macroprudential guidelines,
extending of monetary business sectors, installment frameworks to help activities,
and digital protection to defend purchaser information and data.
Bank Indonesia guarantees the security and orderliness of payment traffic by being:
1. Intelligent business examiner, through joint effort with worldwide specialists and
specialists, Bank Indonesia turns into an investigator for business entertainers
connected with FinTech to give perspectives and bearings on the best way to make
a protected and methodical installment framework.
2. Facilitator, Bank Indonesia turns into a facilitator as far as giving area to
installment traffic
3. Coordination and Correspondence, Bank Indonesia keeps up with associations with
significant specialists to keep on supporting the presence of FinTech installment
frameworks in Indonesia. Bank Indonesia is likewise dedicated to supporting
business entertainers in Indonesia by giving standard direction on FinTech.
4. Assessment, Bank Indonesia conducts observing and evaluation (appraisal) of each
business action including FinTech and its installment framework utilizing

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innovation.

4.2.1. The existence of Fintech for MSME

Entertainers expect Little, Miniature, and Medium Undertakings (MSMEs) in
fostering their business. One of them is connected with MSME players getting to funding.
"Fintech as P2P (shared) loaning makes unbankable MSMEs available. Eventually, this
fintech can increment business limit. In endlessly supporting MSME entertainers, the
public authority has many projects One of them is Individuals' Business Credit (KUR).
Since its send off in 2007, the acknowledgment of the dissemination of KUR and indebted
individuals has kept on expanding [29].
In 2016, the KUR loan fee was recorded at 9.0 percent each year. In 2017, the
acknowledgment of KUR circulation arrived at Rp. 94.4 trillion from the objective of Rp.
100 trillion. In the interim, during the current year, the acknowledgment until August 2017
was Rp. 61.14 trillion from the objective of Rp. 110 trillion with 2.7 million account holders.
Be that as it may, MSME entertainers who need to get to KUR through banks should have
one significant part, in particular security. The shortfall of guarantee makes it challenging
for them to get capital.
Refering to explore results from the Establishment for Improvement of Financial
matters and Money, as of now, there are still around 60 million MSME players. Of this
number, just 11 million MSMEs are bankable. The leftover 49 million SMEs are as yet not
unbanked. Still from similar information, the all out public funding need for MSMEs is Rp.
1,649 trillion. In the mean time, the financial limit is just Rp 660 trillion. Consequently,
there is a hole of IDR 989 trillion [30].
Individuals who are not great educated, in addition to the enormous requirement
for public supporting for MSMEs, are open doors for fintech digital business entertainers.
The presence of innovation has made monetary administrations less expensive, quicker,
and simpler. These three components are at times challenging to get when MSME
entertainers come to the bank. This is the place where the job of fintech can be an answer
for creating MSME organizations later on. The test is to boost the job of fintech in
supporting MSMEs. The principal challenge is the Indonesian public's admittance to
monetary administrations. In light of a review led by the Monetary Administrations
Authority, just 67.8 percent of Indonesians have utilized monetary items. This intends that
there is as yet 32.2 percent who have not utilized monetary items

5. CONCLUSION

The development of cooperatives in Indonesia is very concerning. This is clearly seen

in the absence of Indonesian cooperatives on the global 300 list and developing 300
projects. This makes PR for the ministry of cooperatives and MSMEs. One of the steps that
will be taken so that cooperatives do not continue to decline is to apply financial technology
in the cooperative's operational system. The financial technology system applied to
cooperatives has a system that is not much different from the financial technology applied
by banks in Indonesia.
Fintech development is very fast in Indonesia. The fintech that is experiencing the
fastest growth in Indonesia is peer-to-peer lending. Three peer-to-peer lending startups
dominate the financing market in Indonesia, namely Modalku, Investee, and Martha. The
high growth of peer-to-peer lending startups in Indonesia is motivated by the high need for
funds by the unbanked community. Fintech has an important role in the performance of
cooperatives, namely in the form of increasing efficiency both from cooperative operations
and the efficiency enjoyed by its members. Not only that, Fintech can also be used as a
marketplace for production cooperatives or buying and selling cooperatives. Fintech can
provide other income to cooperatives from purchasing credit, electricity tokens, PDAM
payments, and so on.
The use of Fintech in cooperatives has its own opportunities and challenges, the
opportunity from implementing Fintech in cooperatives is in the form of market expansion
targeted by cooperatives, namely targets for the unbankable community. On the other

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hand, the application of Fintech in cooperatives also has its own challenges. Looking at
the population structure and literacy in Indonesia, Fintech has challenges including low
public trust in cooperatives, low human resources, and low cooperative capital, as well as
the low capacity of adequate internet networks throughout Indonesia or in other words the
uneven economic growth. Therefore, in the future, with research on fintech, it is hoped
that it will be able to improve the fintech-based economy in Indonesia and also add to the
development of more advanced fintech in the Indonesian economy.

ACKNOWLEDGEMENTS
We would like to express our deepest gratitude to Raharja University, in particular to
Alphabet Incubator for helping to complete this research well.

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BIOGRAPHIES OF AUTHORS

Sabda Maulana runs an undergraduate program with the Faculty

of Science and Technology at University of Raharja. He has 5 research
studies of the reputation of SINTA and SCOPUS. Areas of interest are
Information Systems, Business Intelligence, Blockchain and Renewable
Energy.
Can be contacted at email: sabda@raharja.info

Iskandar Mustofa Nasution Lecturer at Bakrie University.

Can be contacted at email: admisi@bakrie.ac.id

Arop Ria S.Panjaitan Head of Career Development Center at

Universitas Esa Unggul.
Can be contacted at email: ria.panjaitan@essaunggul.ac

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