It is a very eye-opening part of my work but also involves a lot of cursing. The cursing has been (thankfully) at myself, for not coming up with an innovative idea all those years ago and missing the boat that my friends and friends of friends are now happily sailing on.

But, hey, who am I kidding? I remember back in 2012, I was paired with the talented Tyas Ajeng Nastiti at a youth leadership conference. She told me her idea: to set up a footwear start-up and promote batik by incorporating it into her footwear designs. I asked her how she would sell the shoes and sandals and she simply said "online". All I remember was telling her the 1,001 risks that she should consider and address. Selling shoes online seemed a very funny idea to me back then.

Fast forward seven years, now Tyas’ Klastik Footwear ships worldwide from her hometown of Surabaya in East Java. Thankfully, my attitude did not discourage her, but each time I remember that episode, I always wish that I had been more encouraging.

I have many similar stories. So, all my cursing has always led to the realization that I am probably more suited to be the advisor to my more entrepreneurial friends and friends of friends, and these stories have also taught me to be more open-minded over the years.

I also make it my job to follow what is going on in the sectors in which my clients work. One way to learn more about the goings on is by being part of their clever initiatives as a consumer.

At least that’s what I tell myself, maybe partly to justify my online spending (maybe time to ask my bosses for a market research budget?). I also figured that if you can’t be the one coming up with the initiatives, you can still benefit from them.

So, now I buy and sell a lot of things online (from food and baby necessities to beauty products and even shoes – Tyas would be proud!), am a lender on a few peer-to-peer lending platforms, and have multiple e-money, e-wallet and crypto-currency exchange accounts.   

There is no doubt that, as a consumer, my life has been improved by all these initiatives. I, for instance, don’t have to brave the famous Jakarta traffic to get my lunch and dinner when I am trying to meet work deadlines, thanks to some of the initiatives.

I can make my money work harder through peer-to-peer lending platforms, which now also allow us to purchase government bonds. If I don’t have time to go to a department store to try on clothes or shoes, I could also order three different sizes online, try them all at home and only keep the right size and ask for the other two to be picked up. The refund for the other two sizes will be in my account in a week’s time. I even rent clothes online – more choices with less wardrobe space required.

My work as an advisor also makes me aware that the government and regulators such as the Financial Services Authority (OJK), Bank Indonesia (BI) and the Investment Coordinating Board (BKPM) have been very supportive of fintech and next-gen tech initiatives.

This support is driven not only by the desire to make the lives of people like you and me more convenient but also (and arguably more importantly) because of the initiatives’ potential to create a more financially inclusive society for those of us at the lower end of the economic strata.

We have probably all seen the recent statistics: Many Indonesians do not have access to traditional financial services, but high mobile phone ownership rates and internet penetration now make e-financial services accessible to a far greater population.  

While there is little doubt that tech initiatives have improved the lives of people across all economic strata, I sometimes wonder if financial inclusion has truly improved to the same extent.

Yes, more jobs have been created thanks to these initiatives – think of the ojek (motorcycle taxi) drivers, on-demand cleaners and masseurs, as well as newly created occupations like social media influencers (who seriously make me think about changing career sometimes).

But do we all have the same access to financial services products now? I doubt it. For example, while the government wants fintech initiatives to serve the "unbanked", the current reality is that only those with bank accounts can become lenders and borrowers on peer-to-peer lending platforms.

We are, however, moving in the right direction, although we still have work to do. Ojek drivers and passengers now have better access to insurance products and more awareness of the importance of insurance. Indonesians who live hand-to-mouth can get short-term loans from peer-to-peer platforms to pay their children’s school fees and necessities. Those with aspirations to start their own small-scale business or expand their existing business can get working capital loans.

But there have been negative side-effects too. Some tech initiatives, coupled with clever marketing techniques, fuel consumerism, in my view. I know I have spent more on online purchases since becoming more active on e-commerce and social media platforms. This could be true for others too.

It is likely to become an issue when we use peer-to-peer lending platforms to satisfy our “wants” as opposed to “needs”; wants that we cannot truly afford and would therefore not purchase had online lending not been so readily available.

Read also: Fintech stakeholders declare war on illegal P2P lenders

I had an unfortunate experience as an online borrower and can, therefore, empathize with other borrowers’ similar experiences. Once, when completing an online purchase, I noticed an option to pay later. It was essentially a one-month loan with penalties for late payment. Let’s be honest: Not everyone will read or fully understand the terms and conditions that are linked to the deal.

Out of curiosity, and in the name of market research, I opted in. The FAQ said that if customers did not pay by the end of the month, any outstanding amount would be automatically deducted from their e-money balance. Given my forgetful nature when it comes to my own administrative matters, I thought this was a very comforting feature.

As predicted, I forgot to repay my loan at the end of the month. But, alas, there was no automatic deduction despite my e-money balance being enough to pay the outstanding amount in full.

Time passed before I realized the accumulating penalties. It turned out that I had received messages about the overdue amount in my inbox but didn't notice them. I only found out one or two months later, when I received a call from a customer service officer asking for payment.

By that time, the amount owed had almost doubled, thanks to the penalties. I explained the situation and asked why the automatic payment had not been deducted but did not receive a satisfactory response. On principle, I stubbornly refused to pay the penalties. To my surprise, verbal abuse followed and in the coming weeks, I received many automated calls reminding me to pay the outstanding amount. There was no real person to listen to my explanation. The contact page also only listed an email address. When I wrote in, they only responded with a holding email. More than three months later, I’m still holding.

As the penalties kept on increasing and the frequency of the calls intensified, I relented and paid the full sum.

Amusingly, I received a voucher for another loan shortly after. But I had learned from my experience and just let it sit in my inbox until its expiry.

I cannot imagine going through this experience on a daily basis for months and having my family members and employers terrorized for my unintended debts. Yet, that has been the experience of some online borrowers, and it is no surprise that OJK has taken enforcement actions against a number of peer-to-peer lending platforms.

It is therefore admirable that the Indonesian Fintech Association (which includes a number of peer-to-peer lending platforms amongst its members) came up with its own guidelines on responsible peer-to-peer lending practices in July 2018.

The guidelines promote the prevention of excessive loans and transparency. My hope is that all peer-to-peer lending platforms adopt these good practices to avoid tarnishing the sector’s reputation.

My other wish is for tech platforms to not ignore the importance of keeping human interaction even as we rely on technology more and more. Whenever I had difficulties with my online purchase or during my peer-to-peer borrowing nightmare, I wished that I could speak to a person rather than a machine. Some platforms have eliminated that option altogether, which is, in my view, unfortunate.

What are your thoughts and observations about the fintech and tech initiatives around you? Are you as excited and optimistic as I am about their future, or do you have deeper concerns about the disruption and pace of technological change?

***

The writer is an associate at Herbert Smith Freehills, seconded as international counsel to Hiswara Bunjamin & Tandjung in Jakarta. She specializes in financial regulatory services, fintech and M&A. The opinions expressed are her own.

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