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Skyrocketing fintech industry must proceed with caution: PwC
The rapid development of financial technology (fintech) is vital to propel future economic growth, but it requires a prudent regulatory approach to avoid a boom and bust, according to PricewaterhouseCoopers (PwC) Indonesia.
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Illustration of financial technology (fintech) (Shutterstock/File)
The rapid development of financial technology (fintech) is vital to propel future economic growth, but it requires a prudent regulatory approach to avoid a boom and bust, according to PricewaterhouseCoopers (PwC) Indonesia.
A survey published by the professional services firm on Thursday indicates that fintech lending could bolster economic growth by extending credit access to individuals “underserved” by financial institutions. The study projects that peer-to-peer lending can add 19.4 trillion rupiah in loans to micro, small and medium enterprises (MSME) by 2020, while contributing 12.4 percent to individual credit access by the same year.
PwC Indonesia deals strategy and operation leader Sharly Rungkat said pushing the industry further was more crucial than ever, particularly after recent data from the International Monetary Fund projected Indonesia’s capacity to produce only 32 percent of the United States’ gross domestic product (GDP) per capita, even at its peak working age population in 2031.
Fintech companies have sprouted drastically this year, growing in number from 88 registered firms in December 2018 to 113 as of May 15.
“We need to have a tailored approach to target these credit invisibles, and it won’t be a one-size-fits-all solution,” Sharly said in a public seminar on Thursday.
She added that the low percentage of loan disbursement to GDP showed that there was still untapped potential for fintech to propel economic growth. Statistics from the IMF and Asian Development Bank showed that household debt in Indonesia had reached 17 percent of GDP in 2017, much lower than China’s 49 percent or Thailand’s 78 percent.
