Financial Technology and Financial Inclusion in Indonesia: Opportunities and Challenges

Abstract

This study aims to analyze the role of Financial Technology in encouraging financial inclusion in Indonesia by using qualitative-based conceptual research methods and literature review. The background of this research is based on the rapid growth of FinTech that offers digital financial service innovations, such as online payments, peer-to-peer lending, and online investments, which can reach unbanked and underbanked groups. The results of the literature review show that Financial Technology contributes to the expansion of formal financial access, the empowerment of micro, small, and medium enterprises, as well as increased access for vulnerable groups such as women. However, the challenges that arise include the digital divide, low financial literacy, consumer protection issues, and the dynamics of the relationship between Financial Technology and traditional financial institutions. Therefore, the success of FinTech is highly dependent on adaptive regulation, increased digital financial literacy, and multi-stakeholder collaboration. The research is expected to make a theoretical contribution to the literature on FinTech and financial inclusion, as well as practical benefits for regulators, industry players, and society. Thus, FinTech has the potential to become the main instrument to support inclusive and sustainable economic development in Indonesia.