NEED TO KNOW / December 2019

Finmas Targets Indonesia’s Lack of Financial Inclusion

By Jayanty Nada Shofa Hongkong-based financial system company, Oriente, decided to tackle Indonesia’s lack of financial inclusion through peer-to-peer lending, also known as P2P, with Finmas. Oriente co-founder, Geoffrey Prentice, said that the country’s low financial inclusion posed as a pressing issue for the public particularly the SMEs. To create a more financially inclusive society, Prentice decided to penetrate into the Indonesian market. On an exclusive interview with the Jakarta Globe, GlobeAsia's sister publication, the Skype co-founder mentioned the rapid growth of the country’s fintech industry. For Finmas to stand on top of the evergrowing lending landscape, Prentice said that there were several things that needed to be taken to consideration. For instance, an improvement on its backend system was necessary. This included improving the Know Your Customer (KYC) system to assess their client’s suitability and to reduce potential risks for P2P lending. “Attracting the right customers or those that are financially literate is necessary. Indonesia has an incomparably well literacy in terms of technology, but they tend to lack the knowledge in making effective decisions with their financial resources,” Prentice said, on Oct. 24, at Hotel Indonesia Kempinski in Jakarta. Prentice also considered regulations were also necessary with the rise of illegal fintech companies operating in Indonesia. This was in response to how Financial Services Authority, or OJK, has identified 144 companies operating without legal entities or proper business licenses. As many have fallen victim to the fraudulent acts, an authorized license was imperative to lift the customer’s doubts when using P2P lending. “We are extremely pro-regulations as the bad actors have become our biggest headache. We applaud the Indonesian government for acting fast on this as Finmas has recently obtained a license from OJK. However, the government needs to tackle this issue as soon as possible to avoid the P2P lending crackdown in China,” Prentice said. Meanwhile, the P2P lending catastrophe in China was caused by how the industry was lightly regulated with a high risk and return profile.