Senior economist and former Indonesian minister of finance, Chatib Basri has emphasized the need for financial technology (fintech) companies to adopt a “path to profitability” strategy, given the expected persistence of relatively high interest rates through the end of the year.

He highlighted that with higher borrowing costs, fintech firms must focus on becoming profitable. He cited India’s success in technology adoption as a model, noting its similarities to Indonesia, including its large population and democratic vibrancy.

The role of the Indonesian Fintech Funding Association (AFPI) is seen as crucial in boosting financial productivity and inclusion.

“In this context, AFPI’s role is crucial for enhancing productivity and expanding financial inclusion,” Chatib said.

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Data from the Financial Services Authority (OJK) shows a 26.73% year-on-year increase in fintech peer-to-peer (P2P) lending, reaching IDR 66.79 trillion as of June 2024. The credit risk level remains stable at 2.79%, down from 2.91% in May 2024.

OJK Chief Executive Agusman expressed confidence in the industry’s efforts to sustain long-term growth and also noted OJK’s support for rebranding fintech services to counteract the negative connotations associated with “pinjol” (online loans).

“The fintech industry also supports the economy and financial sector by reaching grassroots communities with access to loans that remain limited.” he said

The AFPI recently held the “AFPI CEO Forum 2024” to address industry challenges, including combating illegal online lending and improving financial literacy. (Uki Ruknuddin)