For this reason, a breakthrough in risk management is needed through adequate information support by the Financial Service Authority (OJK). Meanwhile, the government can also provide stimulation to address the need for financial inclusion by modernizing cooperatives through the use of digital technology.

The OJK said in October that cumulatively there were 106 registered fintechs which had thus far distributed funds of up to Rp 260 trillion (US$18.5 billion) to 508 million accounts. From January-October 2021, there were 82.6 million lender accounts and 128 billion loaned funds. Meanwhile, from the borrower's side, there were 271 million accounts with total loans reaching 129 billion.

Most Fintech customers use these services consumptively. They often also neglect the contract so that they are entangled in accumulating interest and aggressively imposed fines. This is in line with massive offers and advertisements for the urban consumer segment, through pay later or credit for consumptive needs. Although the interest and fines mechanism has been regulated in OJK regulation 77/POJK/2016, the limits provided are very high, far exceeding the conventional banking average, especially when compared to subsidized MSME credit schemes such as the microcredit program (KUR).

OJK states that licensed fintech providers are allowed to charge 0.8 interest per day or 24 percent per month and fine limit up to 100 percent, which means that fintech is cumulatively allowed to provide interest equivalent to 288 percent per year. Whereas the average conventional bank loan is in the range of 12-14 percent per year. Meanwhile, KUR loans are only about 5-6 percent per year. The very high interest rate certainly does not allow business actors to utilize fintech for business or working capital financing.

At least the ideal business capital requirement should be below the potential net profit it generates. Thus, fintech is actually more targeting the urban middle class for short-term consumptive needs, compared to groups of micro-enterprises who need cheap and flexible funds. Ease of access that is not accompanied by rational costs is certainly only an illusion in developing financial inclusion.

However, in the middle of the fintech industry based on peer-to-peer lending, there are several fintechs that have a more inclusive business vision to help people with certain group segmentation, for example, Tani Hub, I-Grow, E-Fishery, which are engaged in financing agricultural and fisheries investment based on peer to peer lending to finance selected prospective projects.

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