Fintech for Social Impact: Improving Fintech Lending Capability for Financial Inclusion and Sustainability in Indonesia

The fintech industry in Indonesia is proliferating. Fintech peer-to-peer lending is a prominent fintech innovation, with an increasing number of fintech lending platforms in the country. Although fintech lending provides an innovative solution to access credit, whether its benefits have reached all parts of society is still uncertain. As the target market for fintech lending tends to be primarily concentrated in the middle- and upper-income brackets, those in the lower-income brackets could be left behind. Therefore, the impact of fintech lending on financial inclusion and sustainability remains an open question.
Fintech lending institutions should consider a strategy to expand their reach to accelerate economic growth and achieve significant social impact. However, having an effective credit risk management system is an inevitable challenge. This project aims to help fintech credit institutions to improve their credit risk modelling. The results of our research could impact the ability of marginalised people to access credit and provide opportunities for lenders to contribute to their livelihoods. This project will also investigate the critical roles of socio-demographic characteristics, economic conditions, technological affordance, and network effect on financial inclusion. Understanding these factors could help fintech lending institutions to develop their service and narrow the financial gap through technological implementation.