Indonesia's 88 fintech lenders see opportunity in US$70b credit gap

With average loan sizes of US$35,000-200,000, farming remains the main opportunity.

A report released by Indonesian P2P lending firm Uangteman noted that fintechs with technological innovation use data and alternative credit scoring to expand coverage.

"With a credit gap that reaches US$70b (IDR1,000t) per year, the chances of fintech growth are very high," stated Kusnaeryah, daily chair of the Indonesian Fintech Joint Funding Association.

Kusnaeryah adds that there is a capital storage platform which funds traders around the minimarket network, there are those who finance the supply chain of farmers. 

"There are tanifunds, which finance the agricultural supply chain. There are fintechs that finance the marine sector, there are capital companies that finance mothers in eastern Indonesia with the grameen bank model," he continued.

"The presence of Modalku (MyCapital) and Accelerant has filled the productive financing needs of the business segment from US$35,000-140,000 (IDR500m-2b). Even creative sector entrepreneurs such as event organizers now have funding opportunities from P2P lending platforms such as Investree," he noted.

As of December 31, 2018, there were 88 fintech lending companies registered in the Financial Services Authority (OKJ) database, according to Aidil Zulkifli, CEO of UangTeman.

Also read: Indonesia eyes tighter fintech regulations to curb loan shark activity

"Customers who borrow from UangTeman come from various circles including MSMEs. For us, they must always be educated directly or through various media in order to understand the terms and conditions in applying for online loans so that they can avoid situations that could make it difficult for them," added Aidil.

Aidil reminded all to be aware of illegal online lending platforms; look carefully at the validity and legality of the online lending platform they might plan to use. "If one borrows from a platform that is registered, they will join a community and feel safer as their consumer services are certainly regulated by the OJK," Adil said. 

Photo Credit: Uangteman