Exploring Risk and Benefit Factors Affecting User Adoption Intention of Fintech in Indonesia

Abstract

The presence of Fintech as an innovative and disruptive financial service can improve the efficiency and scope of financial services through the application of technology. Fintech is considered to have various benefits. However, based on survey conducted by DailySocial and Otoritas Jasa Keuangan finds that the Fintech adoption rate in Indonesia is still relatively low at around 58.1%, this is in line with a penetration level of Fintech in Asia which Indonesia usage level still in 5% compared to China, Hong Kong, and India. In determining Fintech adoption, users tend to do rational calculations by comparing the perceived benefits and risks and will decide to adopt them when the perceived benefits are greater than the risks received. According to some studies, trust can be mediated to reduce some level of risk, thus this study will also include trust variables in the risk-benefit framework to determine user adoption intention on Fintech services in Indonesia. Based on data collected from 100 Fintech users, this study initially investigated whether perceived benefits and risks significantly impacted Fintech adoption intention. Partial Least Square (PLS-SEM) method is used to estimate the relationship between constructs. As a resulting trust, economic benefit and convenience are proven to significantly influence the user to adopt Fintech. While privacy awareness, financial risk, and legal risk are significantly affected by user trust. The hypothesis testing indicates that security risk has the biggest negative effect and convenience has the biggest positive effect on Fintech adoption intention.