The Role of Fintech Lending in Increasing Access to MSME Financing and Systemic Risk
Keywords:
Access to Financing, Financial Inclusion, Fintech Lending, MSMEs, Systemic RiskAbstract
The development of financial technology, or fintech lending, has brought about significant transformations in the financing ecosystem for MSMEs in Indonesia. This study examines the role of fintech lending in increasing access to financing for MSMEs and analyzes the potential systemic risks it poses. Using a literature review approach and secondary data analysis from various sources, this study found that fintech lending can address the MSME financing gap through faster processes, lower costs, and broader reach compared to conventional financial institutions. However, the rapid growth of this industry also poses systemic risks in the form of credit risk, liquidity risk, operational risk, and regulatory compliance risk. The results indicate that fintech lending significantly enhances MSMEs’ access to financing through digitalization, alternative credit scoring, broad geographic reach, and diversified, flexible financing products, thereby contributing to financial inclusion and regional economic development. However, the findings also reveal substantial systemic risks that stem from alternative data-based scoring, technological dependence, and the pass-through risk model. These results imply that while fintech lending plays a critical role in addressing financing gaps for underserved MSMEs, its sustainability depends on robust risk management, transparency of algorithms, and strong cybersecurity practices.
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