The Role of Fintech in MSME Financing: A Digital Financial Inclusion Analysis in Indonesia

Abstract

The rapid development of digital technology in the financial sector has introduced fintech innovations that play a significant role in improving financial inclusion, particularly for Micro, Small, And Medium Enterprises (MSMEs). This study aims to analyze the role of fintech as an alternative financing solution for MSMEs in Indonesia and to examine the challenges in its implementation. Using a descriptive-analytical method and a qualitative literature review approach, this research explores academic studies, regulatory reports, and publications on fintech and MSMEs. The findings reveal that fintech services, such as Peer-To-Peer (P2P) lending, digital payment, and crowdfunding, provide faster, more flexible, and inclusive financing access compared to conventional banking institutions. However, limited digital financial literacy, regulatory risks, and the sustainability of fintech business models remain critical challenges. This study emphasizes that synergy among fintech companies, the government, banking institutions, and MSME actors is essential to establish an inclusive, secure, and sustainable digital financial ecosystem, thereby enhancing MSME competitiveness while supporting national economic stability.