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Article
Publication date: 18 January 2021

Ami Fitri Utami and Irwan Adi Ekaputra

This paper aims to examine about the nature and strategy of current competitive dynamics by FinTech lending Indonesia players.

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Abstract

Purpose

This paper aims to examine about the nature and strategy of current competitive dynamics by FinTech lending Indonesia players.

Design/methodology/approach

This paper uses both primary and secondary data. Interviews of several executives of a FinTech lending firm are done to gain direct insight of how the firms strategize their business operation. On the other hand, secondary data from internet search (e.g., OJK’s Website, FinTech Lending firm’s websites) are used to grasp the overview of the industrial landscape.

Findings

The study confirms that differentiation, collaboration, compliance and strong internal resources (e.g. team and funding) are the most pivotal elements for FinTech lending success. The study also confirmed the FinTech lending industrial landscape as an emerging and fragmented industry.

Research limitations/implications

This paper offers an original and detailed solution about how the FinTech lending company strategies may survive in a dynamic competition. The paper also shows the industrial analysis of the FinTech lending industry, which is rarely discussed in previous research. However, this study only focused on the lending sub-sector of FinTech, and the sample for primary data is highly limited (only three interviews).

Practical implications

This paper proposes a strategy that can be conducted by FinTech lending companies to achieve their business goals, including business growth, profits and improve financial inclusion in Indonesia. This perspective can act as a means to create practical modus operandi for policymakers and practitioners, especially FinTech lending companies in Indonesia.

Originality/value

This paper offers an original and detailed solution about how the FinTech lending company strategies may survive in adynamic competition. This study also provides a theoretical framework for use in further empirical research into the process of resource mobilization from FinTech lending Indonesia companies.

Details

Journal of Science and Technology Policy Management, vol. 12 no. 2
Type: Research Article
ISSN: 2053-4620

Keywords

Article
Publication date: 16 August 2021

Eddy Junarsin, Mamduh Mahmadah Hanafi, Nofie Iman, Usman Arief, Ahmad Maulin Naufa, Linda Mahastanti and Jordan Kristanto

Innovation in digital technologies has been the main force in promoting growth and inclusion. However, the impact of such innovations remains ambiguous. Within this context, this…

Abstract

Purpose

Innovation in digital technologies has been the main force in promoting growth and inclusion. However, the impact of such innovations remains ambiguous. Within this context, this study aims to analyze the distribution of digitally empowered peer-to-peer (P2P) lending in Indonesia.

Design/methodology/approach

This study uses a quantitative approach to estimate the impact of technological innovation in promoting economic development. In particular, this study employs empirical panel data from 135 financial technology (FinTech) companies from 2015 to 2019 and use the dynamic panel threshold regression approach. This study collects secondary data to build the estimated model.

Findings

Contrary to conventional wisdom, this study’s evidence suggests that there is a delayed effect between the contribution of P2P lending by FinTech firms on economic growth in the country. While the immense growth of FinTech seems promising, the findings indicate that FinTech is far from its optimal point. This study calculates the optimal combination between productive and consumptive lending and between Java and non-Java. In view of this finding, this study proposes strategies to effectively distribute lending and bring about the expected benefit to the economy.

Practical implications

Since the contribution of P2P lending on economic development has not reached its optimum, the findings expose the limitation of current technological innovation in the financial sectors. In this sense, P2P penetration on the financing market needs encouragement. The calculations for optimal allocation between productive and consumptive and between Java and non-Java provide guidance to policymakers. This study helps practitioners to shape strategy and to begin experimenting with different approaches to distribute loans effectively.

Originality/value

To the best of the authors’ knowledge, there are no empirical studies that examine the impact of emerging FinTech companies in promoting economic growth and financial development. The findings close this research gap, especially in regard to innovation management literature, and provide insights for practitioners, policymakers and regulators.

Details

Journal of Science and Technology Policy Management, vol. 14 no. 1
Type: Research Article
ISSN: 2053-4620

Keywords

Article
Publication date: 28 April 2022

Tu DQ Le

This study aims to investigate the determinants of a shift in lending towards household sectors during the growth of fintech credit using a sample of 41 countries between 2015 and…

Abstract

Purpose

This study aims to investigate the determinants of a shift in lending towards household sectors during the growth of fintech credit using a sample of 41 countries between 2015 and 2018.

Design/methodology/approach

This study uses a fixed-effects model by adding indicators for geographic areas and year dummy variables to achieve this objective.

Findings

The findings show that the household credit to firm credit ratio is positively associated with credit information sharing and financial literacy, emphasising the importance of credit information sharing mechanism and financial literacy to household credit growth. More interestingly, the findings show that fintech credit development plays a more critical role in the evolution of firm credit than household credit. Nonetheless, fintech credit development may complement the growth of conventional lending. The results still hold when using several robustness checks.

Originality/value

This is the first attempt to examine the roles of credit information sharing, financial literacy and fintech credit development in a shift in lending activities towards households.

Details

Asia-Pacific Journal of Business Administration, vol. 15 no. 3
Type: Research Article
ISSN: 1757-4323

Keywords

Article
Publication date: 19 May 2020

Sumit Agarwal and Yeow Hwee Chua

This paper reviews recent advances in the empirical literature of FinTech and household finance.

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Abstract

Purpose

This paper reviews recent advances in the empirical literature of FinTech and household finance.

Design/methodology/approach

We survey the effects of FinTech on three different aspects of household finance: payments, lending and portfolio decisions. Specifically, we examine the impact of digital payments, mobile money, FinTech lending, marketplace lending, robo-advising and crowd-funding.

Findings

Studies suggest that FinTech has positively benefited households by increasing consumption and borrowing. This allows them to smoothen their consumption across time. Furthermore, there is an improvement in their portfolio diversification. Nonetheless, there is also evidence that certain households overconsume and borrow beyond their means.

Originality/value

Despite the importance of this topic, there has been a lack of empirical evidence until recently. In this paper, we take stock of the empirical evidence in the literature through the lens of household finance

Details

China Finance Review International, vol. 10 no. 4
Type: Research Article
ISSN: 2044-1398

Keywords

Article
Publication date: 11 October 2021

Haitham Mohamed Elsaid

This paper aims to provide a review of literature directions regarding the potential impact of fintech operators on the financial services market globally. This paper reviews the…

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Abstract

Purpose

This paper aims to provide a review of literature directions regarding the potential impact of fintech operators on the financial services market globally. This paper reviews the literature to identify possible benefits or challenges that fintech firms can have for the traditional banking system.

Design/methodology/approach

This paper is based on a review of published research papers related to fintech and digital finance. The Scopus database, SSRN database and google scholar were used to find relevant research papers. The final sample included impactful papers about the effect of fintech activities on the banking and financial services industry.

Findings

The current paper indicated that while fintech firms would take some market share away from banks, it is not expected that fintech firms would substitute banks. However, banks are required to accelerate their adoption of innovations and advanced technology to compete with fintech firms. It is also proposed that strategic partnerships and cooperation could happen between banks and fintech companies in a way that benefits both sides.

Originality/value

The present paper adds to the understanding of the effect of the fintech firms’ growth on the banking industry in light of the emerging opportunities and threats for the financial sector. The paper also provides guidance for fruitful research on the impact of fintech activities on social and economic welfare in the future.

Details

Qualitative Research in Financial Markets, vol. 15 no. 5
Type: Research Article
ISSN: 1755-4179

Keywords

Article
Publication date: 6 March 2019

Luis Hernan Contreras Pinochet, Guilherme Tongnole Diogo, Evandro Luiz Lopes, Eliane Herrero and Ricardo Luiz Pereira Bueno

Given the large global investments made in FinTechs and the context of Brazilian credit (which has been suffering from the effects of the crisis in the last decade), the purpose…

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Abstract

Purpose

Given the large global investments made in FinTechs and the context of Brazilian credit (which has been suffering from the effects of the crisis in the last decade), the purpose of this paper is to study the propensity of consumption of credit services offered by FinTechs of loans. In order to discover the factors that influenced the propensity to apply for FinTech loans, a theoretical model was designed, which was tested by means of a survey given to individuals who might contract loans.

Design/methodology/approach

The final sample consisted of 507 individuals whose data were analyzed through structural equation modeling (SEM), with estimation of partial least squares.

Findings

From the results of the research, it was possible to draw a profile of the FinTechs of Brazilian loans and also to estimate the antecedents of the propensity to utilize this type of service.

Research limitations/implications

The model proposed in this work was developed to measure the propensity to consume in relation to the credit services offered by lending FinTechs.

Practical implications

The consumer should intensify the use of these channels to shape financial products and services to their needs, thereby democratizing access to credit, which is often restricted in quantity and quality by policies of institutions that dominate the Brazilian lending market.

Originality/value

Aspects such as trust, personal innovation, perceived utility, ease of use and social influence, as well as the constructs that precede them like privacy, stigma and transactional distance, explain 41.5 percent of the propensity to use services from lending FinTechs in Brazil.

Details

International Journal of Bank Marketing, vol. 37 no. 5
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 15 January 2020

Taofik Hidajat

This paper aims to highlight the existence of illegal peer-to-peer (P2P) lending in Indonesia, unethical practices of P2P lending operators to borrowers, regulatory weaknesses and…

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Abstract

Purpose

This paper aims to highlight the existence of illegal peer-to-peer (P2P) lending in Indonesia, unethical practices of P2P lending operators to borrowers, regulatory weaknesses and offer recommendations to reduce unethical practices.

Design/methodology/approach

This paper is a general discussion through desk research using secondary data from journal papers, research reports, books and papers online.

Findings

There are regulatory weaknesses in regulating illegal P2P lending. There are no strict legal sanctions for P2P lending operators who act unethically to borrowers.

Originality/value

This paper discusses the unethical actions of P2P lending operators and the inability of regulations to take legal action against illegal P2P operators.

Details

Journal of Financial Crime, vol. 27 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 15 August 2023

Nisha Mary Thomas, Priyam Mendiratta and Smita Kashiramka

Owing to the dramatic rise of FinTech credit in the financial sector, this study describes its knowledge and intellectual structure and paves the way for future research.

Abstract

Purpose

Owing to the dramatic rise of FinTech credit in the financial sector, this study describes its knowledge and intellectual structure and paves the way for future research.

Design/methodology/approach

The study employs citation analysis, keyword analysis, co-author analysis, co-citation analysis and bibliographic coupling on 268 peer-reviewed articles published during 2010–2021 and extracted from the Web of Science database.

Findings

Research on FinTech credit has picked up momentum from 2016, with majority contributions from China, followed by UK and USA. International Journal of Bank Marketing is found to be the most productive journal. Co-citation analysis reveals that past studies have focused on three dominant themes, viz. (a) factors that influence user intention to adopt technological products and services (b) borrowers' and lenders' characteristics that impact fund-raising in FinTech credit platforms and (c) evolution of FinTech market over the years. Bibliographic coupling reveals that recent trends in FinTech credit include (a) impact of emerging technologies like blockchain, artificial intelligence, big data on financial system, (b) factors that encourage consumers to adopt the FinTech products and services, (c) mechanisms by which FinTechs have transformed formal credit markets, (d) factors that lead to successful fundraising in FinTech platforms and (e) critical perspectives on digital lending platforms.

Originality/value

To the best of the authors' knowledge, this is a pioneering study undertaking an exhaustive analysis of FinTech credit as a research area. The study offers valuable insights on potential topics of research in FinTech credit domain like investigating Balance Sheet Lending Model, investigating the impact of FinTechs on financial system, and new markets by collaborating with scholars of other regions.

Details

International Journal of Bank Marketing, vol. 41 no. 7
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 26 December 2022

Rizky Yudaruddin

This paper investigates the joint impact of COVID-19, alliances and digital strategies on bank lending. Additionally, this study examines whether the effect of COVID-19, alliances…

Abstract

Purpose

This paper investigates the joint impact of COVID-19, alliances and digital strategies on bank lending. Additionally, this study examines whether the effect of COVID-19, alliances and digital strategies on bank loans depends on the types of banks.

Design/methodology/approach

Using a sample of 92 commercial banks in Indonesia from March 2020 to September 2021, a fixed-effects model (FEM) was used to analyze data.

Findings

This study provides robust results regarding the negative impact of the COVID-19 pandemic on bank loans in Indonesian banking. Furthermore, it reveals that collaboration between banks and FinTech does not substantially influence bank lending, despite the rise in proven cases tending to reduce credit expansion. It emphasizes the importance of the development of mobile banking as part of digitalization in boosting loan bank expansion, and this finding is more noticeable in private and small banks.

Practical implications

This study highlights some policy recommendations to improve bank lending during the COVID-19 period, particularly the role of new alliances and digital strategy in involving COVID-19 pandemic mitigation within a novel financial ecosystem.

Originality/value

This study offers a significant contribution to the empirical literature that specifically explores the joint impact of the COVID-19 pandemic, alliances and digital strategies on bank lending in banking.

Details

Managerial Finance, vol. 49 no. 7
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 13 September 2022

Dini Rosdini, Ersa Tri Wahyuni and Prima Yusi Sari

This study aims to explore credit scoring regulations, governance, variables and methods used by peer-to-peer (P2P) lending platforms in key players of the Association of…

Abstract

Purpose

This study aims to explore credit scoring regulations, governance, variables and methods used by peer-to-peer (P2P) lending platforms in key players of the Association of Southeast Asian Nations (ASEAN) region’s P2P, Indonesia, Malaysia and Singapore.

Design/methodology/approach

This study explores the P2P Lending characteristics of the three countries using qualitative literature review, interview, focus group discussion and desk research.

Findings

This study concludes that the credit scoring variables used by the countries’ companies are almost the same. Key drivers of the differences are countries’ regulations, management/business core value and credit scoring data processing methods.

Practical implications

Ultimately, this research provides a comprehensive view for investors, businesses and researchers on the topic of ASEAN credit scoring governance and will help them navigate the complexities and improve their awareness on the importance of credit scoring governance in P2P lending companies.

Originality/value

This research provides an in-depth perspective on how P2P lending companies, credit scoring governance and regulations in the biggest three countries in Southeast Asia.

Details

Journal of Science and Technology Policy Management, vol. 15 no. 2
Type: Research Article
ISSN: 2053-4620

Keywords

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