Fintech is a Current Financial Innovation, Here are 5 Benefits
Fintech is a Current Financial Innovation, Here are 5 Benefits
The widespread use of cashless transactions has spurred the development of financial technology (fintech) industry in Indonesia. For the Indonesian society, fintech, or financial technology, is seen as a technology that facilitates financial transactions to be easier and faster.
To delve deeper into this, the article below will help you understand the definition, its development in Indonesia, how it operates, and the benefits that users gain from fintech.
Definition of Fintech
In general, fintech is an abbreviation of financial technology. Its presence represents an innovation that makes financial transactions more practical, easy, and quick. Bank Indonesia provides another definition for this financial technology. Fintech is essentially financial services infused with technology, resulting in a more modern business environment. Transactions can be conducted remotely without the need for face-to-face interactions.
Development of Fintech in Indonesia
Fintech has been present in Indonesia since 2006. However, its development was relatively slow initially due to the limited uptake by the Indonesian population. Over time, startups have played a significant role in driving and advancing fintech. Consequently, a majority of Indonesians have begun to realize and utilize fintech services.
In 2015, the Indonesian Fintech Association was established, which further bolstered trust among the Indonesian population. Additionally, the growth of fintech companies reached 140 entities.
Furthermore, the fintech sector experienced rapid growth with the introduction of Shariah-compliant fintech in 2017, leading to the formation of the Indonesian Shariah Fintech Association.
How Fintech Works
Fintech is a business that integrates transactions, management, and systematic money storage. Its operational methods are complex and tailored to serve the public.
For instance, consider fintech companies specializing in electronic credit. Firstly, they collect data from users who utilize electronic credit. Secondly, they verify and secure the data with the Deposit Insurance Corporation (LPS) and Bank Indonesia (BI). Thirdly, fintech disburses funds to electronic stores where customers apply for credit.
Fourthly, the stores distribute products to customers or users. Finally, fintech companies provide loan interest to users with each payment. This represents the operational system of fintech.
Benefits of Fintech
There are several benefits of fintech that you should be aware of:
- Making Transactions Faster and Easier
The main reason why Indonesians are drawn to fintech is the safer and more convenient transaction process. They no longer need to carry or deposit cash into banks. Instead, they can conduct various transactions using only their mobile phones from anywhere (home, malls, or offices). - Improved Funding Processes
Fintech has notably simplified access to funding for the public. Funding assistance can be applied for and processed solely through mobile phones, eliminating the need to visit physical offices. Users simply input their data via their phones, and the office processes it swiftly, enabling users to receive funding assistance. - Enhanced Living Standards
This point is closely related to the second one. When individuals receive funding assistance, they can utilize it for daily needs or even business ventures. Consequently, the standard of living improves as finances can be used according to individual needs. - Increased Financial Inclusion
The fourth point has broad implications, not only for individuals but also for banks. There is a mutually beneficial involvement that fosters economic activities (buying, selling, and borrowing). Hence, financial inclusion is on the rise. - Accelerated and Improved Economic Circulation
The fifth benefit that you can gain from fintech is the acceleration and enhancement of economic circulation. Access becomes easier, safer, and more comfortable. Even entrepreneurs can easily obtain capital assistance by leveraging financial technology.
Types of Fintech in Indonesia
There are several types of fintech in Indonesia that you should be aware of:
- Digital Wallets
These are mobile applications serving as digital wallets. Various digital wallets are commonly used in Indonesia, such as GoPay, OVO, and Dana. Economic transactions can be conducted anywhere with just a tap. - Peer-to-Peer Lending
The second type involves fintech platforms providing funds for business or daily needs. This concept has become popular, although some operate illegally. To ascertain the legality of fintech platforms, one can check with the Financial Services Authority (OJK). - Crowdfunding
The third type connects fund providers with institutions in need of funds. Transactions through fintech platforms are secure and convenient. Crowdfunding not only involves fund collection but also business development.
Once you understand how fintech operates and its benefits for business needs, consider implementing it into your own business. To ensure optimal business operations, utilize Brick to connect with digital financial services. Utilize Brick's loan services to facilitate quick and easy verification processes. ***
