Sharia Fintech, Solution for Moslem Market in Indonesia

Nowadays, people’s are increasingly in need of services that are in accordance with the religion adopted. Moslem community as a majority in Indonesia, demand a financial institution or payment service that compatible with their religion, which is commonly called sharia.

Responding to the demand from some peoples, now Financial Technology (fintech) companies are beginning to provide the services of sharia label. Although some fintech have been known as conventional financial services, but currently they understand that in business the customer’s demand can be a good opportunity, especially for the the business development.

Operationally, the Islamic financing system is actually almost the same as conventional financing systems. This system is available for anyone who needs financial help, the system will be used as an individual or capital loan for a business.

But as a customer, they need comfortably or suitability to choose the financial services. moreover, they can make comparison among the financial services, in this case fintech, which are more profitable and relatively less risky. Basically, there are three differences between shariah and conventional fintech, which are:

1. Interest Rate
Interest rate is the amount of money that must be paid by the consumers when they pay their loan. The conventional Fintech will charge interest in any credit payments to the customer as a loan agreement. The amount of interest rate depends on the payment time and the nominal amount of the loan.

In sharia, there are differences in costs that cannot be paid by consumers because interest is usury. In sharia fintech, we’ll not find that credit given the contract as a loan. Sharia system replaces it with murabaha, ijarah wa iqtina, and musyarakah mutanaqishah.

Each of these contracts must have a different regulatory system. The definition of Murabaha (Arabic language) contract  is a contract of sale and purchase for the organizers. In this case, fintech will act as a buyer of objects or products that customers want. Then the borrower will sell the product to the customer with a certain margin. The margin will be an advantage to the buyer, and not as interest as in conventional system.

The definition of ijarah wa iqtina contract is a rental agreement. It means that fintech acts to buy the objects that desired by the customers, then it will lease these items to customers within a certain time. Furthermore, the customers can buy the items, it will change the ownerhip status.

The definition of musyarakah mutanaqishah contract is contract whereby either fintech and customers can put the capital for something that later customers can buy the part of company as a way to have an object completely. So it is clear that in the implementation of fintech sharia system does not use loan contract and does not wearing an interest, or commonly called as loan without usury.

2. Risk
For conventional fintech or loan services, customers will have the risk when they can not pay the mortgage for some reasons. The risk is usually confiscation of secured loan or black list from Bank Indonesia to the customer (if it is unsecured loan). While for fintech sharia system, the risk of inability of the customer to pay the installment will be borne by both parties, fintech company and customer itself.

3. The Use of Loan
The conventional Fintech will provide loan for personal necessity that may not be explained and as capital for business. As fintech sharia the use of loan can be for education, umroh, hajj, and other religious activities.

For you information, the financial services (banking) or non fintech, both conventional and sharia, According to the aspect of documents, both of them require completeness documents such as; copy of identity card, proof of income, proof of secured loan, and others. While the amount of available loan is around Rp 5 million to Rp 250 million.

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