Abstract
The integration of the financial industry and financial technology (Fintech) plays a pivotal role in increasing financial services reach and inclusion for the large unbanked population in Indonesia. Fintech adoption optimization expands the financial access to formal financial institutions, especially to vulnerable groups such as the unbanked population who predominantly reside in rural areas far from formal financial institutions. Fintech is viewed as a game changer to bring finance to the unreached communities via information technology and digital financial landscape. In this causal research, data collection was done via online questionnaires to 485 Fintech users between December 2020 and April 2021. Data analysis and path modelling was performed using smartPLS 3.0 software. Result shows user innovativeness as a significant predictor, directly and indirectly affecting the adoption of Fintech in Indonesia, while user attitude found the most important factor towards Fintech adoption. Financial literacy is the least important variable to predict Fintech adoption, contrary to popular belief. This indicates that Fintech usage requires less financial literacy and is potential to reach unbanked population and those with low financial literacy. To make Fintech more inclusive, the government needs to accelerate improving Information and Communications Technology (ICT) infrastructure such as widening mobile broadband penetration and soft infrastructure by encouraging Fintech startup, allowing regulatory sandbox for startups, and driving financial institutions to innovate through Fintech to bring financial services to unbanked population.
Highlights
Innovation, technology, and advancements in information and communication technologies have affected every facet of human life as it brings incremental changes to the economy
Most respondents in the study were female (62.1%). This is following the characteristics of financial technology (Fintech) users in Indonesia, who are less than 35 years old (72.2%), with the highest education levels being bachelor’s degree (42.9%) and high school (36.7%)
The majority of respondents in this study (84.3% with 33.6% experiencing once a month, 22.3% two–three times a month, and 28.5% more than four times a month) have used Fintech and 15.7% have never used Fintech; this corresponds to the age characteristics of predominantly young people who better understand and quickly adapt to technology
Summary
Innovation, technology, and advancements in information and communication technologies have affected every facet of human life as it brings incremental changes to the economy. These advancements have brought about disruptive changes in the financial sector. The development of financial technology (Fintech) is an innovation that helps people do financial transactions with ease and speed. As a developing country, has limited funds to enhance its financial accessibility and infrastructure, the country has high percentage of unbanked population. Fintech could serve as a game changer in bringing financial products to the currently unreached and unbanked population in Indonesia. Fintech adoption can benefit the unbankable population, J.
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