Sharia fintech to transform Indonesia into halal producers’ hub

Jakarta (ANTARA) – Ammana Fintek Syariah CEO Lutfi Adhiansyah believes sharia-compliant financial technology (fintech) will transform Indonesia into a halal producers’ global hub in 2024 to align with National Committee for Sharia Economy and Finance’s vision and mission.

“It is impossible for Indonesia to become a global hub for halal producers without the help of technology. I guarantee if we only apply a traditional approach, we will not achieve it since technology makes movement massive, faster, more efficient, and transparent,” he stated during a discussion held by the Indonesian Journalists Association (PWHI) ahead of 2021 National Press Day on Wednesday.

“That is why fintech is needed as a complementary approach for the sharia-compliant economy to rise,” he remarked.

Sharia-compliant fintech is also very relevant to grow owing to the Islamic demography in Indonesia. Almost 87 percent of Indonesia’s population of 267 million are Muslims, he pointed out.

“Nearly 175 million of the Indonesian population of 267 million use internet and 88 percent of the internet users are accustomed to buying products online,” he remarked.

Adhiansyah noted that 74 million of the Indonesian population belonging to the middle class have not enjoyed financing services, thereby leading to a financing gap.

The financing gap must be fulfilled by other institutions: banks, multi-finance firms, smallholder credit banks and cooperatives.

“That is why sharia-compliant fintech is needed,” he emphasized.

Adhiansyah affirmed that the planned merger of three sharia state banks — Bank Syariah Mandiri (BSM), Bank BRI Syariah (BRIS) and Bank BNI Syariah (BNIS) — into Bank Syariah Indonesia (BSI) is positive news for sharia fintech.

“With the merger of sharia banks, the sharia bank infrastructure can also be used for sharia fintech,” he remarked.

The fact that Indonesia is the largest country in Southeast Asia, with the largest number of e-commerce users, will also drive the growth of sharia fintech, he affirmed.

“E-commerce is an assembly of people that have begun adopting technology for online shopping,” he stated.

The number of fintech companies in Indonesia rose to 88 in 2018, from 34 in 2017 and further climbed up to 160 in 2019.

Loans distributed through the peer-to-peer (P2P) lending platform also swelled to Rp73 trillion in 2020, from Rp2.5 trillion in 2017.

Source: Antara News

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