Indonesian Banks Adopt Cautious Approach to Fintech Lending Partnerships

Rising Defaults Prompt Stricter Selection Criteria

Indonesian banks are becoming increasingly cautious when partnering with fintech lending companies due to rising defaults in the peer-to-peer (P2P) lending sector. Recent cases of alleged defaults, such as with PT Dana Syariah Indonesia (DSI), have heightened concerns. According to Haryanto, Division Head of Consumer Lending at Permata Bank, banks will be more selective in their partnerships with P2P lending firms in 2026.

Growth Potential in Micro and Small Business Financing

Despite the challenges, experts believe there is significant growth potential in financing micro and small businesses. Josua Pardede, Chief Economist at Bank Permata, notes that the largest potential lies in providing working capital to micro and small enterprises, particularly those with rapid turnover. Other promising segments include retail traders, supply chain participants, and businesses outside major economic centers.

Regulatory Environment and Industry Outlook

The Financial Services Authority (OJK) is promoting safer collaboration practices through new regulations. Agusman, Head of Executive Supervision for Financing Institutions at OJK, reported that bank funding remains the dominant source of financing for P2P lending platforms, accounting for 64.10% of total outstanding funding as of November 2025. The OJK expects this trend to continue in 2026, with a focus on creating a more balanced and sustainable funding structure.

Risk Management and Mitigation Strategies

Experts warn of several risks associated with bank funding through P2P lending platforms, including credit risk, fraud risk, and operational risk. To mitigate these risks, banks are advised to implement stricter partner selection, limit exposure concentration, establish clear risk sharing mechanisms, and enforce robust data security standards. The OJK is also exploring additional risk management measures, such as insurance protection schemes.