The rapid development of the technology industry at this time is also accompanied by the increasingly sophisticated model of non-cash-based financial transactions to support more practical daily activities.
In addition, this non-cash transaction is also considered safer and there is no need to bother carrying large amounts of cash which is very risky for the occurrence of crime.
This completely cashless financial transaction is also known as fintech or financial technology, which fully flows financial transaction traffic through a special platform or application based on financial services.
Get to know Fintech
In general, the definition of fintech is financial technology which refers to technology systems or products and financial services businesses that are tools for conducting online or non-cash transactions.
The World Economic Forum or the World Economic Forum also assesses fintech as a technological innovation based on financial industry services with a wider reach, such as for the flow of transactions, loans, investments or for payments.
Meanwhile, Bank Indonesia views fintech as a new technology-based sector or type of financial service as an innovation from the conventional financial transaction model.
Fintech Development in Indonesia
The development of fintech in Indonesia itself is fairly rapid. Initially, fintech was developed by the application-based specialized financial services industry or startups with a focus on transactions such as online loans to payment transactions.
Along with the high public interest in using fintech as a financial transaction service, conventional banks have also begun to look at this industry as a form of integration that adapts to the times.
The banking sector has even built a new ecosystem known as a digital bank with various additional superior features such as investment, savings, deposits to payments, all of which are processed online.
The high flow of financial transactions through fintech has also triggered the growth of new startups, which even until mid-2019 the number of the fintech industry in Indonesia had reached 249 companies targeting two segments, namely: peer to peer lending and sales and purchase transactions of electronic goods. there are other types of fintech such as aggregators, insur tech to application-based financial planning businesses.
In fact, based on Bank Indonesia statistical data, it shows that the transaction value through this fintech is able to grow with a transaction value of up to Rp. 12.3 trillion in just five years.
From the peer to peer lending sector, OJK recorded loan transactions of up to Rp. 22.67 trillion in 2018.
Fintech Legal Regulations in Indonesia
Following the rapid development of the fintech industry in Indonesia, the government has also specifically regulated fintech legal regulations through Financial Services Regulation Number: 77/POJK.01/2016 concerning Information Technology-Based Lending and Borrowing Services.
In this regulation, the government specifically stipulates that the fintech industry must be in the form of a limited liability company or it can also be in the form of a cooperative with a minimum initial capital participation of Rp. 2, 5 billion. And, every fintech that will operate in Indonesia is required to apply for a fintech manufacturing permit through the Financial Services Authority (OJK).
Advantages of Fintech
The advantages of fintech as a financial services industry that fully relies on technology in the transaction process are much better than conventional transactions, such as: obtaining easier and faster access to funding such as for capital effort.
In addition, the transaction process is also safer and faster by only accessing via devices connected to the internet, either smartphones or computer devices, so that it is safer and minimizes risk.