The Development of Financial Technology

Know the Current Development of Financial Technology, Financial technology/FinTech is the result of a combination of financial services.

And the technology that ultimately changes the business model from conventional to moderate. Which initially had to pay face to face and carry a certain amount of cash.

Now can conduct long-distance transactions by making payments that can be made in a matter of seconds. Financial technology emerged along with changes in people’s lifestyles which are currently dominated by users of information technology.

With FinTech, problems in buying and selling transactions and payments such as not having time to look for goods in shopping places, banks/ATMs to transfer funds, and reluctance to visit a place because of unpleasant services can be minimized. 

In other words, FinTech helps to buy and sell transactions and payment systems to be more efficient and economical but still effective. Fintech is an abbreviation of financial technology which means financial technology. 

So actually what is fintech is a technological innovation developed in the financial sector so that financial transactions can be carried out practically, easily, and effectively. Along with the rapid development of technology and the growth of startup companies, the greater the development of fintech in Indonesia. 


How Do We Know the Current Development of Financial Technology?

the development of financial technology
Technology Financial

Indonesia’s fintech technology began in 2006, but unfortunately at that time, there were still very few companies in this field. When the Indonesian Fintech Association was founded in 2015, Indonesian fintech trust began to grow among the public. 

As a result, fintech companies in Indonesia have grown so rapidly that 140 companies are listed on the OJK fintech list. It doesn’t stop there, in 2017 sharia fintech developed again. Sharia fintech is a type of fintech that operates on the basis of Islamic principles. 

Therefore, the Indonesian Sharia Fintech Association was born which oversees sharia fintech in Indonesia. The implementation of Financial Technology in Indonesia has been regulated by the government through the issuance of Bank Indonesia regulations. More details about the legal basis of fintech are as follows:

  • Bank Indonesia Circular Letter No. 18/22/DKSP regarding the Implementation of Digital Financial Services.
  • Bank Indonesia Regulation No. 18/17/PBI/2016 regulates all matters related to Electronic Money.
  • Bank Indonesia Regulation No. 18/40/PBI/2016 stipulates the Implementation of Payment Transaction Processing.

The development of fintech in Indonesia brings many good impacts. The benefits of fintech are as follows. 

  • Financial Transactions Become Easier

And the first point of the benefit of fintech is that financial transactions become easier. When it comes to making Financial technology transactions, you no longer need to go home or go to the bank to do it.

Only through a smartphone, all financial activities can be completed. Of course, this makes it easier for the community.

  • Better Funding Access

Thanks to fintech, financial technology is growing rapidly to reach various circles of society. This has resulted in more and more people understanding how to get financial assistance to support their daily activities.

  • People’s Living Standards Increase

This Financial Technology benefit point is still related to the previous benefits. After the community has better access to funding, the community can use the funds to finance their consumptive and productive activities.

Finally, their standard of living and well-being has increased.

  • Supporting Financial Inclusion

The fourth benefit of fintech is to support increasing public financial inclusion. What is meant by financial inclusion is community involvement in economic transactions, ranging from buying and selling, to contributions, to savings and loans. 

  • Accelerating Economic Turnover

Fifth, the benefit of fintech is accelerating economic turnover. Access to finance and ease of transactions encourage faster and more practical economic cycles.

In addition, fintech helps business actors to get low-interest capital through online loans as fintech products.

Fintech is one of the sophisticated business fields that integrates financial management, storage, distribution of money, and technology.

Therefore, the way fintech works are complex and branched according to its services to the community.


How Types of Financial Technology in Indonesia?

  • Peer-to-peer Lending

The first type of fintech is peer-to-peer lending. financial services that provide loans for business capital or meet needs. The existence of this fintech example helps business actors to obtain capital quickly online.

However, you still have to be wary of illegal fintech such as unofficial online loans that have the potential to deceive their customers. Make sure you choose a legal online loan. You can see the official OJK fintech list on the OJK official website.

  • Crowdfunding

This is a fintech product as a platform to bring together parties who need funds and donors with guaranteed safe and easy transactions.

Crowdfunding is not only used in collecting donations, but also in developing businesses to find investors and business people.

  • E-Wallet

And The next type of fintech is a digital wallet, also known as an e-wallet. This fintech product plays a role in providing a place to store money electronically for its users.

The purpose of fintech products in the form of e-wallets is to make it easier for users to disburse funds for transactions in other applications, such as marketplaces, merchant apps, and the like.

  • Micro Finance

Fourth, the type of fintech is microfinance. Microfinance is a fintech company service that helps the lower middle class support their lives and finances through the provision of financial services.

  • Payment Gateway

The fifth type of fintech is a payment gateway. A payment gateway is a fintech system that authorizes payments through online transactions. An example of fintech in this payment gateway is PayPal.

  • Investment

As fintech develops, the investment process can be done easily. Many investment instruments migrate through online applications so that investors can easily invest their capital.

  • Digital Bank

The last type of fintech is a digital bank, which is a bank where 100% of transactions are done digitally, from account registration to asset management.

Digital banks are different from mobile banking, because m-banking transactions are still related to offline banks, while digital banks are 100% electronic.

Example Of A Financial Technology Product

the development of financial technology
Financial Payment

One example of The Development Of Financial Technology products in the form of a digital bank in Indonesia is ONe Mobile.

Although released by OCBC NISP, ONe Mobile is a stand-alone digital entity.  And with separate asset management from non-digital accounts.