Until february 2018 the amount of money that could be distributed by sharia commercial banks and sharia business units have reached about Rp 282.1 trillion. However according to the Financial Services Authority (OJK), the amount have gone down 1.3% compared to last year that was able to reach Rp 285.7 trillion.
While financial technology (Fintech), which also provide loan (P2P Lending), and even, also use the method of sharia, have ditributed loan about Rp 4.47 trillion until March 2018. Indeed, The amount of money that can be distributed by fintech sharia was much smaller compared to sharia banking industry. However, fintech loan have growth much faster which reached 74.6%.
The percentage was certainly a giant loop because last year no one knew about fintech P2P at all. However, some financial experts and especially fintech businessmen continue to convince that fintech companies are not a problem to the banking industry.
Sharia Banks Have Opportunities To Collaborate
Related to this conditions, OJK Commission Chairman Wimboh Santoso stated that the sharia banking industry could still continue to develop its business, especially by adopting and applying the latest technology. "(Banking) Industry businessmen must understand the risks that come from the fintech’s business and mitigate it well," he said.
Furthermore, he stated that there are several factors that change the current global financial landscape. One of the major causes is the appear of fintech. He argued that fintech is a strategic opportunity for sharia finance to expand the market segment. Therefore it would be much better if the sharia finance industry (banking) conduct a collaboration with fintech. Even Wimboh boosted the idea of the collaboration between banks and fintech to be implemented soon.
Although the use of technology in the financial industry is considered necessary, but in the practice of the development of Sharia financial industry should also be followed by efforts to improve the protection to the consumers. He ensured that OJK will continue to control the usage of the development of technology in financial services by emphasizing the principles of benefits and adhering to good governance, based on Transparency, Accountability, Responsibility, Independence and Fairness (TARIF).
Even at the end of 2016, OJK also released a regulation concerning one of Fintech’s operation which is peer to peer lending. Currently OJK is still preparing the regulations that arranging the digital financial innovation which the main purpose is to improve the protection to the consumers, and maintain the stability of the financial system, and also, ensure anti-money laundering and counter terrorism financing. So even the industry need the innovation in technology today, it does not mean to accept the risks to the consumers, or even to the financial industry.
The regulations which still prepared by OJK are also to introduce and promote the online crowdfunding to the public, in order to improve financial inclusion and financial understanding. This step is taken to encourage fintech companies based on lending to take part in the sale of Government Online Retail Bonds, and also, in the distribution of revolving fund, which collaborate with relevant ministries and agencies.
Until March 2018 the number of fintech peer to peer lending companies that registered in OJK have reached 50 companies. While 35 companies were in the process of registration, and 29 companies were interested to register in OJK.
Meanwhile, until March 2018 the number of fund providers (investors) for fintech peer to peer lending were 145,965 people or up to 44.6%. The number of borrowers (through fintech applications) have reached to 1,032,776 people or increased 297.8%. While the ratio of non-performing loan (NPL) was 0.55% or decreased 0.99% compared to December 2017.
The increase of funding showed that more and more investors are interesting to invest their money into alternative investments that are easier and more profitable. Moreover, the amount of money that can be invested is quite few, starting from Rp 100.000, -. And the increase of fintech’s borrowers showed that these financial institutions are considered to have better competencies compared to other financial institutions.
Nevertheless the assets of the sharia finance industry (banking) is still much larger than fintech, which reached Rp 439.32 trillion by March 2018 or have increased 19.3% over the same period last year. Then, third party fund reached Rp 347.15 trillion or grew 18.8%. So if the sharia banking industry will copy or collaborate with the latest financial technology business, they will not be left behind.
Disclaimer: This article is a summary of news articles obtained from a number of mass media. We are not responsible for the accuracy of data or sources of information presented by the mass media that became the reference.
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