Fin­tech lend­ing boom ex­ploits short­fall in bank loans

The New Age (Western Cape) - - Business -

FIN­TECH firms, of­fer­ing loans of as lit­tle as a few hun­dred dol­lars, are see­ing a spike in lend­ing in In­done­sia where tens of mil­lions of peo­ple have lit­tle or no ac­cess to bank credit – help­ing al­le­vi­ate a fi­nanc­ing short­fall es­ti­mated at more than $73bn (R870bn).

The emer­gence of these peer-to-peer (P2P) lend­ing plat­forms has so far been wel­comed by In­done­sia’s fi­nan­cial reg­u­la­tors which see them as of­fer­ing a much needed ser­vice to cash-strapped busi­nesses and con­sumers at a time when southeast Asia’s big­gest econ­omy has been hob­bled by slug­gish bank lend­ing.

Wim­boh San­toso, head of In­done­sia’s fi­nan­cial reg­u­la­tor, OJK, said while the trend was still a drop in the ocean of over­all lend­ing, more than 250 000 peo­ple had taken out loans through Fin­tech.

Around 30 P2P firms had ex­tended 2.6 tril­lion ru­piah (R2.3bn) in lend­ing as of Jan­uary, com­pared with just 247 bil­lion ru­piah of lend­ing in De­cem­ber 2016.

An­other 36 more firms are wait­ing to be ap­proved. P2P lend­ing has helped small busi­nesses ac­cess cap­i­tal.

“It is so flex­i­ble. I don’t need col­lat­eral and I can sub­mit my doc­u­ments any time of the day. There’s no bank like that,” said Siy­ono, a 51­year­old busi­ness owner in Jakarta, who stum­bled on a P2P plat­form while brows­ing on his smart­phone and took out a loan at 16% an­nual in­ter­est. Bank loan pen­e­tra­tion in In­done­sia, where only one in three adults have bank ac­counts, is around 34% of GDP in 2015, among the low­est of Asia Pa­cific coun­tries. – Reuters

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