The Role of Financial

Technology in Indonesia
Digital Economy Market

Irna Puji Lestari, SE, MM

Government Financial Anayst at Ministry Religious Affairs of Indonesia
Researcher & Doctoral Candidate at Gadjah Mada University
Industrial Revolution 4.0 and Digital Economy

• The Fourth Industrial Revolution - a fusion of

technologies that blur the lines between the
physical, digital, and biological domains.
• Transformation from physical and labor
capital to human/intellectual capital and
information.
• Changing business models, production
processes, and delivery channels.
• Moving towards the Fifth Industrial
Revolution (Human Cyber Physical
System/HCPS) that encourages closer
collaboration between humans and
machines
 Transformation in Financial Services

Source: IMF
Fintech is “sebuah inovasi pada industri jasa
keuangan yang memanfaatkan penggunaan
teknologi. Produk fintech biasanya berupa suatu
sistem yang dibangun guna menjalankan Fintech
mekanisme transaksi keuangan yang spesifik operations must
(OJK)” have official
permission from
• Fintech is general and not limited to one the OJK
particular financial services industry.
• Fintech Lending/ Peer to Peer Lending is limited
to financial service innovation in lending and
borrowing transactions only.
Values of
Fintech
Source: KPMG (2017)
Note: comparison including e-aggregator
Note: comparison including e-aggregator
 Navigating Business Models in FinTech
Business Process Coordinating Example
Payment, Clearing, Settlement B2C, C2C • B2C: Hewlett Packard Indonesia (https://www.hp.com/id) sell product directly to
(payment, remittance, e-wallet, end-consumer (for payment using OVO, Dana, Kredivo)
P2P) • C2C: Kaskus, OLX, Airbnb linking consumer to consumer (with many optional
payment method using fintech)
Deposit, lending & capital B2C, B2B, • B2C: Kredivo offer lending that serves in the B2C (also B2B)
raising (crowdfunding, P2P C2C • B2B : Modalku provide small businesses to acquire loans and for lenders to fund
Lending, credit facilities) small business loans to earn compelling returns
• C2C: kitabisa.com as crowdfunding from individual donors to individual recipients
Market provisioning (e- B2B, B2C • B2B: Alibaba.com is e-aggregator for B2B that offer a wide range of products and
aggregator, product comparison, services from various suppliers and manufacturers.
market analysis) • B2C: Cermati.com is e-aggregator that provides consumer to compare and apply
for various financial products from many fintech provider such as loans, credit
cards, and insurance
Investment and Risk B2C Bareksa is a fintech that offers investment products and services to retail customers,
Management (insurance, making it a B2C company.
planning, e-trading)
Infrastructure and cross process B2B, B2G • B2B: Payfazz is a cross-process fintech company that focuses on providing
(security, blockchain-based) financial services to businesses (B2B), such as collaborating with BRI agro to
launch digital banking
• B2G: Carbon Conservation and technology platform Dappbase is collaborating
with the Indonesian government through blockchain-based smart contracts for
forest protection projects. Funding will be transferred automatically to villages
that succeed in reducing fire incidents. These funds will be used for infrastructure
development such as schools and hospitals.
Fintech Supporting in Indonesia
 Accelerating the fulfillment of financial
inclusion for the Indonesian community.
 Promoting the growth of the MSME
sector and digital-based pioneering
companies (especially for the
unbankable society).
 Facilitating sustainable finance, such as
agricultural loans, renewable energy,
etc.
 Long-term resource efficiency and
savings --- paperless, cashless, cost
reduction, simplified transaction chains.
 Fintech - Current Issue in Indonesia
 Tech-winter phenomenon
 The decline in the trend of funding flows for digital startups in Asia has
reached 60 percent
 Mass layoffs of fintech companies

 Two financial system: Sharia vs Conventional

 Different market leads different strategy and more cost?
 Different objective: More profit or more ethical?

 Post-pandemic COVID-19
 Lifestyle changes, “Buy Now Pay Later” is increasingly popular (until
Semester I-2023, outstanding BNPL debt is IDR 25.16 trillion, dominated by
genZ) --- dilemma for fintech because GenZ is a potential market
(considered more technologically literate than the previous generation) but
they also not yet mature in managing their finance
 90% of MSMEs need financial assistance during and after the Covid-19
pandemic (Asian Development Bank Survey) --- another dilemma, because
most fintechs do not have sufficient capital to meet the needs of the large
MSME market
Case example: Fintech Strategy to face the Pandemic
Fintech in Islamic Finance
 Game changer in Islamic Finance —
access, choice, visibility
 Increasing sharia financial inclusion by
mitigating friction between traditional
and conventional financial relationships
 Fintech can reduce information
asymmetry — a major problem in
Islamic financial contracts
 Reducing credit intermediaries — digital
technology can cut costs
 Promoting Islamic values systemically
— ensuring sharia compliant and
encouraging Islamic social finance and
business ethics
POTRET ISLAMIC FINTECH DI INDONESIA

Indonesia Ranks 3rd

in the 2022 Global
Islamic Fintech Index
Big Challenge of Islamic Fintech in Indonesia

Low sharia
Big Market
financial
(Muslim
literacy
(9.14 per 2022 – Population)
OJK) Fraud

Unequal Digital Infrastructure in remote areas of Indonesia

 Al-ba’i Akad untuk pertukaran kepemilikan barang dan harga antara penjual dan pembeli. Cth Peer
to peer lending

Ijarah Pemindahan hak guna atas barang/ jasa dengan waktu tertentu menggunakan upah.
Cth: penggunaan layanan aplikasi Fintech
Akad
Fintech Mudha
rabah
Akad pengelolaan modal dan keuntungan usaha berdasarkan nisbah. Cth: digital
banking syariah

Syariah di
Indonesia Musya
rakah
Antara dua pihak atau lebih dalam usaha untuk membagi keuntungan sesuai nisbah
yang disepakati. Cth: crowdfunding syariah

Pelimpahan kuasa untuk melakukan perbuatan hukum tertentu dengan imbalan upah
Wakalah (ujroh). Cth: peer to peer lending

Akad pinjaman antara pemberi dan penerima dengan ketentuan penerima pinjaman harus
Qardh mengembalikan uang dengan waktu dan cara yang disepakati. Cth: e-money dan e-wallet
Regulasi:
MUI No. 117/DSN-MUI/II/2018
tentang layanan pembiayaan
berbasis teknologi informasi
berdasarkan prinsip syariah
 Skema Fintech secara Umum
SHARIA P2P
LENDING SCHEME

• Sharia P2P lending is not subject

to interest rates.
• Funders will receive
compensation for the services of
their representatives
• The contract used is wakalah bil
ujrah (representation for a fee).
Source: Skema P2P Lending yang digunakan alamisharia
MUDHARABAH SCHEME
TAKAFUL SCHEME USING BLOCKCHAIN

Source: alami.institute
FINTECH FOR ZAKAT & WAQF USING BLOCKCHAIN
The Indonesian Government's agenda in
Fintech Development (2020-2024)
Electronic Know-Your-Customer
Digital ID (digital KTP) for
remote account opening Suptech untuk pengawasan
Suptech helps supervisors digitize and analyze
regulatory processes, enabling risk monitoring
and compliance more efficient and proactive.

Cybersecurity, fraud prevention,

and risk management
Support for the fintech ecosystem
The upcoming issuance of the data
protection law, e-risk management, Training, mentoring, funding, marketing
corporate governance capacity opportunities, providing digital access
infrastructure, bank as innovation lab

For the full of agenda, see OJK, Digital Finance Innovation Road Map dan Action Plan 2020-2024
Fintech is game
changer in Digital
Economy including
in Islamic Finance
Area.
Fintech has the potential to
transform the Islamic finance
industry by providing innovative
solutions that cater to the
specific needs of the Muslim Fintech will continue to
community.
develop along with
technological
developments.
In the future, we can expect to see more
virtual/ robot assistants that are able to
provide personalized financial advice and
assistance.
 Give your
opinion!
1. If COVID-19 had never happened, would
digital payments still be your preferred
payment choice over cash? Why?

2. As a Gen Z, what benefits can you get

from the use of fintech in your daily life?
(you can use various perspectives, for
example from the perspective of
borrowing, payments, investments, etc.)