Fintech can drive growth of digital economy: Minister Plate

Fintech can drive growth of digital economy: Minister Plate

Minister of Communication and Informatics Johnny G. Plate during the Digital Economy Forum II titled "Financial Technology and Online Lending" held in a hybrid setup from here on Wednesday (September 29, 2021). (ANTARA/kominfo.go.id)

Jakarta (ANTARA) - Minister of Communication and Informatics Johnny G. Plate believes that the financial technology sector, or fintech, can be the driver for growth of the digital economy in Indonesia.

In a press statement quoted on Thursday, Plate remarked that the potential of fintech lies in the funding reach and amount.

According to the Ministry of Communication and Informatics, fintech lending services reached 27.2 million people, or 10 percent of the populace, in August this year.

In addition, the sector lent Rp14.95 trillion last year, thereby making Indonesia the second most successful country in terms of attracting fintech investment among the ASEAN countries: Indonesia, Malaysia, Singapore, Thailand, and Vietnam.

Investment that entered Indonesia reached around US$178.48 million, or 20 percent of the total fintech investment in the ASEAN region.

The ministry also observed that scores of fintech corporations in Indonesia were becoming stronger in terms of funding, starting from the pre-series to the early stage and until the late stage.

Moreover, Plate noted that financial technology industry players still had plenty of room to grow since a certain segment of the population yet did not have optimal access to modern banking services.

Quoting a Fintech Industry Outlook in a Southeast Asian study, he estimated that 50 percent of the population of six ASEAN nations did not yet have a bank account or were an underbanked population.

However, on the flipside, this condition will pose a bigger challenge, especially since fintech players in Southeast Asia were projected to experience a K-shaped economic recovery.

"This is where companies, considered healthier and better in quality, will be capable of receiving a higher valuation in the next round of funding, while corporations that are on the other side of the spectrum will have difficulty in attracting investment to drive recovery efforts," Plate expounded.

Furthermore, the fintech industry was still plagued by numerous problems in the digital space, such as fraud, information hacking through the sniffing method, and money mule schemes wherein perpetrators request victims to transfer their money to someone else's account.

The ministry has suggested precautionary measures, so that the fintech industry can grow in line with the strengthening of the digital economy ecosystem in Indonesia.

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