Abstract
The growth of digital technologies has changed the way of doing financial transactions. Even though the transaction value for financial technology in 2018 grew by 24%, the financial inclusion rate in Indonesia is still low, with 64% unbanked. The aim of the study was to analyze the factors of the growing digital technology that influence customer decisions in choosing financial technology services using customer knowledge as the intervening variable. The growing digital technology is measured using social networking, regulatory services, and financial service facilities variables. The sample of this research focused on the microsegment customers located in Java Island. Statistical data are analyzed using Algorithm PLS. Results show that customer decision in choosing financial technology services was strongly influenced by customer knowledge. Customer knowledge was formed from information gathered from the social network, the formal assurance by the government, the financial service facilities, and financial inclusivity. The study recommends a need to educate, promote, and provide adequate information to increase familiarity and literacy rate with regard to financial technology. The study also recommends an urgent clear government regulation to protect the interests of customers and industries.
Highlights
As the world advances rapidly, digital technology continues to develop
The aim of the study was to analyze the factors of the growing digital technology that influence customer decisions in choosing financial technology services using customer knowledge as the intervening variable
One point to consider in choosing rural banks is its safety, since the government protects all financial transactions (38%)
Summary
As the world advances rapidly, digital technology continues to develop. Considered one of the emerging countries in the world, Indonesia faces the growth of digital technology innovation. The government was committed in developing the national fiber optic infrastructure (was called Palapa Ring) to provide the availability of communication services This project would give more affordable communication services, accelerate development in the Eastern region of Indonesia, as well as support the implementation of electronic application and increase prosperity for all including more access for financial inclusion through the utilization of financial technologies (Kementerian Informasi dan Komunikasi, 2018). To support the growth of businesses, the government provided regulations to encourage the ultramicro segment to get business loans from financial technology companies, especially from the Peer-to-Peer (P2P) lending in Indonesia (Bank Indonesia FinTech Office, 2017) This new platform was expected to encourage the growth of the digital economy while simultaneously exposing the public to financial services (financial inclusion).
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