By: Muh Rudi Nugroho, SE., M.Sc
Lecturer of Sharia Economics FEBI UIN Sunan Kalijaga Yogyakarta | This article was published in Suara Aisyiah in March 2019

The world has transitioned into the digital era. The rapid advancement of technology has inevitably led to evolving lifestyle trends within the community. One notable trend is the increasing prevalence of various digital transaction services, including Financial Technology (Fintech) and e-commerce, particularly within urban communities in Indonesia. These services demonstrated positive growth in 2018 and are expected to further expand in 2019. Additionally, fintech and e-commerce are now beginning to collaborate in payment services, exemplified by digital payment platforms like OVO, T-cash, DANA, and GO-PAY.
In general, Fintech represents the fusion of financial service models with technology, revolutionizing traditional financial transaction processes and simplifying them. Fintech services encompass a range of offerings, including Payments, Clearing & Settlements Deposit, Lending & Capital Raising, Market Provisioning, and Investment Management. In Indonesia, the most prevalent types of fintech are Payments and Lending & Capital Raising. Currently, there are 33 licensed fintech companies specializing in payment services, particularly electronic money issuance, and 73 companies focusing on Lending & Capital Raising.
Currently, digital payment trends have significantly bolstered the growth of Indonesia’s offline retail sector. The adoption of digital transaction systems, known for their practicality and efficiency, has been widespread among businesses, particularly in major cities, and has extended to surrounding areas. The user base has become increasingly diverse. Despite this, many Indonesians still rely on cash transactions for their daily needs. Fintech is no longer just a topic of conversation, it has become deeply integrated into the community, reshaping people’s financial habits. Rather than traditional methods like bank transfers, individuals now favor digital wallets and electronic money for their payment needs.
Based on Bank Indonesia’s statistical data, the use of electronic money has seen a significant surge. In 2017, the value of electronic money transactions reached Rp 12.3 trillion, marking a 43 percent increase from the previous year’s Rp 7.06 trillion. The total transactions in 2018 soared by over 300 percent compared to the previous year, reaching Rp 47.1 trillion. In the realm of fintech lending, data from the Financial Services Authority (OJK) reveals that the public borrowed Rp 16 trillion through fintech services in October 2018, representing a Rp 14 trillion increase from the previous month.
Nowadays, fintech is no longer perceived as a threat. It is anticipated that numerous online credit providers or fintech lending companies will increasingly collaborate with banks. Furthermore, the partnership between fintech payment and e-commerce is expected to become more prevalent this year. In my view, the growth of fintech and banking collaboration in the current year could surpass 2018 figures by more than threefold. Many banks are poised to distribute unsecured loans through fintech lending. Similarly, the collaboration between e-commerce and fintech is projected to intensify in the current year (2019).
The fositive fintech trend is undeniably making a positive impact on the Indonesian economy. According to a study conducted by the Institute for Development of Economic and Finance (Indef) in collaboration with the Indonesia Fintech Association (Aftech) in August 2018, it was revealed that the development of fintech in Indonesia contributed to a direct and indirect increase of Rp 25.97 trillion in the Gross Domestic Product (GDP). Moreover, household consumption saw a rise of Rp 8.9 trillion. Furthermore, within the business sphere, labor compensation in the form of wages and salaries increased by Rp 4.5 trillion, particularly in the trade, finance, and insurance sectors.
Furthermore, the presence of fintech is estimated to have created job opportunities for 215,433 individuals, not only in downstream sectors but also in upstream sectors such as livestock and agriculture. Another positive outcome of fintech’s presence is its capacity to reach small sectors like SMEs that were previously underserved by traditional banking services. Through fintech, it indirectly promotes financial inclusion for lower-middle-class communities. SMEs are integrating their business operations with fintech service providers for marketing purposes. Consequently, this integration has the ultimate effect of boosting the ratio of credit distribution to GDP. Given these circumstances, the presence of fintech has had a direct and indirect impact on the increase in the macroeconomy.
The future of fintech in Indonesia appears bright and promising, but it is not without its challenges and negative impacts. The strong public interest in fintech services has led to the proliferation of illegal fintech entities. Moreover, the growing popularity of fintech in Indonesia has increased the risk of e-commerce crimes, including data breaches, fraudulent financing, misuse of client data, and the potential for defaults experienced by fintech companies acting as intermediaries for financing or credit.
Another intriguing aspect of fintech’s presence is its ability to not only drive the economy but also influence consumer and community behavior. The shift in consumption patterns is propelled by the convenience of transactions, potentially leading to increased consumption and, inadvertently, fostering extravagant lifestyles, particularly among lower-middle-class communities. The growing prevalence of fintech is purportedly having a notable impact on traditional retail businesses and SMEs, as evidenced by the closure of several minimarket and supermarket outlets in Indonesia.
It is crucial to note that in the utilization of fintech, particularly for the Muslim community in Indonesia, the muamalah contract must be transparent to avoid the three prohibitions in muamalah: Riba, Gharar, and Maysir. Therefore, the involvement of the government, specifically the Financial Services Authority and Bank Indonesia, in collaboration with the National Sharia Council of the Indonesian Ulema Council, is essential to oversee the use of fintech from both the consumer and service provider perspectives.
Once more, the presence of fintech has numerous positive impacts on the economy in Indonesia. However, without synchronized policies from all stakeholders to support the increasing trend of fintech usage, its presence may lead to a rise in e-commerce crimes. Moreover, overlapping policies could lead to a mutual shifting of responsibilities among stakeholders. Therefore, to uphold fintech stability and maximize its potential, cooperation and shared responsibility from stakeholders are necessary, particularly in terms of supervisory measures, policies, and laws related to fintech in Indonesia.