Fintech & Financial Literacy growth must be balanced

The growth of fintech in Indonesia is certainly good news for all of us. Fintech in Indonesia continues to grow from year to year, it is even considered to be a game changer that will bring changes to public financial services that are becoming completely digital in the future.

Of course, many factors have helped the growth of fintech in Indonesia, including the difficulty of the community in obtaining financing from conventional financial institutions, and millennials who are already accustomed to various technological developments, making them prefer to use fintech that is easily accessible anywhere through their gadgets.

According to OJK, public interest in investing does not only occur in the capital market but also fintech lending. In July 2021, retail lenders had reached 179,000 entities with a loan value of 5.4 trillion rupiahs.

This shows how big the potential for fintech growth is, and it is hoped that it can help improve our country's economy.

Although fintech has developed quite rapidly, unfortunately, this has not been accompanied by an increase in financial literacy in the community.

Then why should people's financial literacy be improved?

There are three main reasons why the development of fintech must be accompanied by an increase in public financial literacy, namely:

1. So that fintech development can be maximized

Increasing public knowledge and understanding, of course, will have a positive impact on the future development of fintech.

This is evidenced by the increasing number of retail lenders caused by increased financial literacy, especially for the millennial community.

If more people understand how fintech works, what benefits they can get from using fintech, and how significant the potential of fintech is in the future, of course, it will increase public interest and trust in investing using fintech.

2. Avoid spreading hoaxes about fintech

Improving financial literacy is one of the best ways to avoid the spread of hoaxes in an increasingly disturbing society.

If the level of financial literacy has increased, of course, the public will not be easily swayed by the temptation of fake investments, fraud, or hoax news that makes the digital economy ecosystem in Indonesia not conducive.

The community needs the readiness to fight the spread of hoaxes about fintech, and that requires correct information, knowledge, and understanding. And all of that can be fulfilled through good financial literacy.

3. So that people are not easily tempted by illegal loans

The current digital development certainly makes it easier for many parties. With digital developments, it is easier for people to access information anytime and anywhere.

Unfortunately, this technological advancement is also still widely abused by some people for their gain.

Due to the current low level of public financial literacy, many individuals use the internet and social media for various crimes. Today many frauds, extortion, and other crimes harm many people.

One of the current phenomena is the rise of illegal borrowing. Currently, illegal lending can thrive in our country, due to people's low financial literacy, which makes it difficult for them to distinguish which digital financial platforms are legal and which are illegal.

Coupled with the various advantages and marketing methods they do, more and more people are falling into illegal loans.

Therefore, let's together continue to try to improve people's financial literacy with what we have today. Start with the closest people, and also take advantage of social media to spread official information that is useful for the community.

Improving financial literacy also certainly requires support from many parties, from the government, non-government institutions, and legal fintech players, to the community.