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View all search resultsFintech companies need to protect customers from frauds and data misuse: Observers
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Illustration of financial technology (fintech). (Shutterstock/File)
A
s financial technology (fintech) continues to gain momentum in increasing the financial inclusion rate, questions remain as to how fintech firms can further expand their business and protect customers against fraud and personal data misuse.
Coordinating Economic Minister Darmin Nasution has acknowledged that fintech companies play an important role in increasing the financial inclusion rate, especially in the outermost, frontline and disadvantaged regions of the country, often referred to as the 3T regions, thanks to the country’s expanding internet connectivity.
“The role of fintech is important in promoting inclusion in a country as big as ours because it can provide financial access to areas that we’ve been having difficulty in reaching,” he said during a speech at the Indonesia Fintech Summit and Expo 2019 in Jakarta on Monday.
The rise in the role of fintech companies in financial inclusion is not only apparent in the percentage of people who have accounts in formal financial institutions, which according to the World Bank had increased to 48.9 percent in 2017 from 36 percent in 2014, but it is also shown in the increase in electronic transactions, which jumped in value from Rp 47.2 trillion (US$3.35 billion) in 2018 to Rp 81.92 trillion in the first eight months of this year, according to Bank Indonesia.
Indonesian Fintech Association (Aftech) chairman Niki Luhur shared the minister’s view, saying that fintech companies’ ability to reach those living in rural areas who did not have access to conventional banks, continued to improve from day to day thanks to the improvement in internet connectivity in rural areas.
Because of their virtual infrastructure, he said, fintech firms were also more efficient in reaching those living in hard-to-reach places as they did not have to build physical infrastructure, such as branches, unlike conventional financial institutions.
Besides increasing financial inclusion and opening access to financial services for all, the rise of fintech has also increased the different types of financial fraud, especially by unlicensed peer-to-peer (P2P) lending platforms.
