Toward An Inclusive & Sustainability Islamic Fintech Leading In Indonesia

By Firdaus

The Big Opportunities of Islamic Fintech

Indonesia is a big country with enormous industrial potential in any industry, with a bonus because Indonesia has a significant demographic bonus potential. According to data from the Central Bureau of Statistics/Indonesian Statistical Bureau (BPS), the demographic bonuses referred to include: 274 million population, 84% under the age of 54 years, 60% smartphone penetration with 202 million internet users, 38% financial literacy, 124% mobile subscription, 76% financial inclusion. (Statistic, 2021) 

Regarding the financial technology (Fintech) industry, e-commerce transactions in Indonesia reached 54% growth in 2020 and are predicted to achieve digital economy growth of USD 124 Billion in 2025. (Statistic, 2021). Meanwhile, statistically, data on Fintech lending in Indonesia are as follows: 148 platforms with total assets of USD 128 billion, accumulated loans of USD 11 billion with 49 million borrower accounts, and 549 thousand lender accounts. (Capgemini Research Institute, 2020)

On the one hand, with such vast potential, the sharia fintech data in the country with the largest Muslim population in the world, it is found that the number of sharia fintech players in Indonesia is only eight units with an accumulated asset of USD 5.2 billion. (Capgemini Research Institute, 2020).  It can conclude that there is still considerable potential for the development of Fintech peer-to-peer lending in Indonesia.

The Big Challenges come over

Of all the current opportunities, it is not necessarily free from the various challenges. Various cases related to the practice of fintech lending in Indonesia, especially during the Covid-19 Pandemic, have given rise to a wrong perception of the existence of fintech lending in Indonesia.

Why do the terrible perceptions increase even during the Pandemic? Because during the Covid-19 Pandemic is a time when some Indonesians need financial support for their lives and to survive in economic uncertainty.

The trend that has grown in Indonesia during the Covid-19 Pandemic is that more and more people, especially from the lower middle class, are entangled in Fintech Lending practices that apply very high interest to the principal provided. This practical fintech lending has implications for the mental health of Fintech lending victims, generally known as PINJOL, the acronym for Online Financing. Some cases lead to suicides because they feel pressured and embarrassed in society. (MNC, 2021).

Furthermore, no strong regulation causes this digital business’s potential to be misused for the specific interests of capital owners in making profits in the community. Inadequate laws also have the potential to cause shadow banking practices in this business; as stated by Perry Warjiyo, Governor of the Central Bank of Indonesia, ‘the digital technology has made the financial services business usually carried out by banks and other financial institutions increasingly developed and taken over by Fintech and raises the risk of shadow banking. (Roy, 2019)

At the same time, it is feared that shadow banking penetration will disrupt economic stability. This practice facilitates the disbursement of high-interest loans, thus potentially causing high non-performing loans (NPLs) or bad loans. This high of NPLs, of course, is very much against the principle of sustainability in business, which requires the business not to stagnate at one stage but to be sustainable. If, in the end, every Fintech pursues high capital accumulation and large profits and ignores prudence, Fintech will enter the decline phase too early. In this gap, Islamic Fintech can take a position and have a good bargaining position in the digital business industries in Indonesia.

Islamic Fintech Sustainability and Inclusivity

Why Islamic Fintech? Islamic finance has brought the basic principles of economic sustainability; Fintech is just infrastructure. Even in Islamic banking, insurance, and social finance, these values are inherent in them if we refer to the Sustainability economy roadmap in Indonesia, which is to produce comprehensive support from the financial services industry for sustainable growth resulting from the alignment of economic, social, and environmental interests.  It means that the financial services industry, including Fintech, must produce products and systems that can balance economic interests, including the balance between income and effort costs incurred. Moreover, consider social impacts such as; Does the product produced further improves welfare or vice versa, causing the number of suicide cases to increase and thinking about the environment (ecosystem) in it. Drink and get life from the water source. Can Islamic Fintech accommodate all of this? It will lead to the shariah aspect that animates Islamic Fintech itself, as Sharia can be analogized to a clear spring where all human beings, animals, and plants can live.

Islamic Fintech must adhere to the principles of Maqhosid shariah, which, according to Al-Ghazali Al-Ghazali, is reflected in five main things: protecting religion, soul, mind lineage, and property. Every law or rule that contains these five principles is called maslahah. If the Fintech business does not benefit the economy, society, and environment where humans are located, it is inevitably incompatible with Maqhosid shariah. (Chapra and Bank, 2007)

The Islamic fintech approach is how to innovate, update the system and reach as many communities as possible so that the goal of achieving the welfare of the ummah can be realized. In addition, Islamic Fintech, in its operations, also applies the principle of inclusiveness, which is accepted as an open-minded concept, and pluralism in the sense that it is not elitist and only taken by one group. Even though Indonesia has a Muslim majority, inclusiveness must be prioritized.

To form a sustainable and inclusive Islamic fintech system, the big paradigm that must be comprehensively wrapped is maqosid shariah as the goal of muamalah activities. Maqosid shariah must be embodied in the rules from the regulators and the government in the form of solid and transparent regulations and sustainable roadmap finance as the spearhead is continuous innovation.


According to the data, the potential for developing Islamic Fintech in Indonesia is quite promising. Nevertheless, the data will be empty if no effort is made to master it. Relying on the largest Muslim population alone is insufficient because, like other muamalah, Islamic Fintech needs generally accepted methods to reach the market.

Finally, with the support of funds and technology in today’s era, anyone can create applications based on information technology and use them to do business. However, the most important thing is how the technology produced is good (in this case, Fintech) and able to contribute to the welfare of humankind.

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Capgemini Research Institute (2020) ‘World FinTech Report 2020’, pp. 1–35. Available at:

Chapra, M. U., and Bank, I. D. (2007) ‘The Islamic Vision of Development in the Light of Maq ā sid Al-Shar ī ‘ ah’, (September). DOI: 10.13140/RG.2.1.4188.5047.

MNC, T. L. (2021) 5 kasus bunuh diri akibat Pinjo/5 cases of commit suicide because of online lendingOctober.15. Available at:

Roy, F. (2019) Bos BI Bicara Soal Digital & Risiko Shadow Banking Fintech/ Head of Bank Indonesia talk about the risk of shadow banking in FintechCNBC Indonesia. Available at:

Statistik, B. P. (2021) Statistik e-commerce 2020.

Toward An Inclusive & Sustainability Islamic Fintech Leading In Indonesia
ibantu May 1, 2024
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