Implementation of Technology, Efficiency, Knowledge, Risk on Trust

Level of Fintech Used in MSMEs in Tangerang City

Tjahjanto, Indah Rahayu Lestari, Rinny Meidiyustiani, Imelda

Universitas Budi Luhur

imelda@budiluhur.ac.id

Keyword: Technology, Efficiency, Knowledge, Risk, Fintech

Abstract: Micro, Small, and Medium Enterprises (MSMEs) are increasingly growing with the development of

technology, where MSMEs are one of the pillars of the strength of the Indonesian economy. Fintech is one

of the drivers in helping to improve finance for MSMEs, especially those in the middle and lower classes.

At least more than 40 Fintech businesses have emerged throughout 2017. By utilizing the development of

Fintech, in addition to increasing efficiency in the financial sector also minimizing the risk of fraud and

cybercrime in the financial sector. For this reason, it is necessary to increase knowledge to MSMEs

regarding the benefits of using Fintech, so that the level of trust in MSMEs towards Fintech is increasing,

and the use of Fintech is every day.

1. INTRODUCTION

Micro, Small, and Medium Enterprises (MSMEs)

are increasingly growing with the development of

technology, where MSMEs are one of the pillars of

the strength of the Indonesian economy. It can be

said that MSMEs play a role in maintaining

economic stability. Rapid technological

developments in the digital era are increasingly

complete with the presence of Fintech. The term

Fintech is a financial service using a technology

base which of course will further facilitate the

technology base which certainly facilitates

transactions. This new financial model, Fintech, was

first introduced in 2004 by Zopa, the British

Financial Institution which runs a loan service which

later in 2008 was continued to become Bitcoin by

Satoshi Nakamoto.

Fintech can eliminate the role of banks or

financial institution services in providing financial

services to customers, assisting customers in making

financial decisions, reducing operating costs, risk of

losses due to bad loans, and developing markets.

The implication of Fintech in MSMEs makes it easy

for MSMEs to access financial service products

offered and apply for financing without having to

come directly to banking branches or other financial

institutions. Besides financing, Fintech is also used

in payment transactions. Payment transactions are

the most developed activities. The data below shows

the distribution of Fintech technology activities in

Indonesia:

Figure 1. Distribution of Financial Technology Activities

in Indonesia

Source: Fintech Indonesia

2. LITERATURE REVIEW

Technology

The technological context refers to internal and

external technology, including equipment and

processes. This context also describes both new

technologies and old technologies that are relevant

122

Tjahjanto, ., Lestari, I., Meidiyustiani, R. and Imelda, .

Implementation of Technology, Efﬁciency, Knowledge, Risk on Trust Level of Fintech Used in MSMEs in Tangerang City.

DOI: 10.5220/0008930401220125

In Proceedings of the 1st Inter national Conference on IT, Communication and Technology for Better Life (ICT4BL 2019), pages 122-125

ISBN: 978-989-758-429-9

to the organization. The results of the study show

that on the technological aspects:

a) Relative Advantage

According to Rogers (1983), relative advantages

are technological factors that can be felt as

providers of benefits for companies.

b) Compatibility

Rogers (2003) argues that compatibility is the

extent to which it is innovation is perceived as

consistent with existing values, experience,

and the needs of potential adopters.

c) Complexity

Complexity is a level of difficulty in understanding

and using the system (Sonnenwald et al.,

2001).

Efficiency

Finance Technology or Fintech is a financial

services digitalization program that can improve the

efficiency of financial transactions. Also, it makes it

easier for people to get financial access. Lately,

Bank Indonesia (BI) seems to be pushing hard to

encourage Fintech to increase competitiveness in the

era of globalization of financial technology. At

present many financial sectors, especially banks, are

using Fintech as an effort to improve efficiency. The

trend of using cards more often than cash seems to

underlie the banking sector to be more efficient in

financial services. The Indonesia ICT Institute

Executive Director Heru Sutadi explained, even

though the use of technology in finance was not

cheap, if the entire community helped support BI's

efforts to develop Fintech, the costs would not be

large.

Knowledge

Knowledge about Fintech has a big contribution to

MSMEs in using Fintech itself. Lack of knowledge

about Fintech will cause the UMKM's low level of

confidence in using Fintech. According to Baihaqi

(2016) uses two indicators to measure the

knowledge of MSME actors, namely:

1) Declarative knowledge

Declarative knowledge is knowledge of facts and

based on concepts.

2) Procedural knowledge

Procedural knowledge is the knowledge that is

consistent with applicable accounting rules or

standards, usually depending on experience.

Risk

The three risks below are not only centered on the

risks experienced by users, but also for Fintech

owners, and even the state. Therefore, the

government, through OJK and BI made regulations

and solutions so that Fintech could still run safely.

1. Risk of cybercrime

This is the most potential risk. Fraud, misuse of

client data, digital signatures that can be

faked, and various other cybercrimes against

vulnerable data security need to be addressed.

2. Risk of default

For Fintech who runs a business as financing or

credit, the risk of default is quite worrying.

Investors themselves must be prepared from

the start that the risk of taking credit default

risk is their responsibility.

3. Risk of funds laundering and acts of terrorism

The presence of Fintech also has a risk of funds

laundering and funding for terrorism. Easier

and faster financial transactions cause this

risk.

So far, Bank Indonesia has also set conditions that

must be met in order to be able to make

transactions. These conditions are 1) must

have institutions that are in Indonesia, 2) all

types of transactions must be made in rupiah

currency, and 3) all funds must be placed in

banks. (Ana Fauziah, 2017).

Fintech

Fintech comes from the term Financial Technology,

which is defined as innovation in financial services

which is an innovation in the financial sector that

gets a modern touch (Ernama, 2017). Financial

transactions through this technology include

payment, investment, money lending, transfers,

financial plans, and comparison of financial

products. The financial industry technology

(Fintech) is one of the financial service's methods

that became popular in the digital era today. Digital

payments are one of the sectors in the Fintech

industry that is the most developed in Indonesia.

This sector is then most expected by the government

and society to encourage an increase in the number

of people who have access to financial services.

(Budi Wibowo). The picture below shows the

evolution of Fintech from year to year.

Figure 2. The evolution of Fintech

Implementation of Technology, Efﬁciency, Knowledge, Risk on Trust Level of Fintech Used in MSMEs in Tangerang City

123

Source: Auditia Setiobudi, et al. (2018)

3. RESEARCH METHODOLOGY

The method used in this study is descriptive

qualitative. This research was conducted to find out

more about indicators in the Technology, Efficiency,

knowledge, and risk framework for the level of trust

in Fintech use in MSMEs. The method of data

collection is conducted through semi-structured

interviews to describe the phenomenon of

application-based cashless payment. Interviews

conducted are with business people (SMEs) who use

financial technology such as TCash, OVO, and so

forth.

4. DISCUSSION

Fitri Nuraini, Rieska Maharani and Andrianto

(2016)

Based on the research conducted by Fitri

Nuraini, Rieska Maharani and Andrianto (entitled

The Strategy for Increasing MSME Competitiveness

and Cooperatives in Facing the ASEC (Asean

Economic Community): A Study of Library, the role

of MSMEs is very important in creating employment

for the community and contributing non-export

products. oil and gas which can increase the

country's foreign exchange income.

Nofita Wulansari, Wahyu and Yunus Kurniawan

(2017)

Based on the research conducted by Nofita

Wulansari, Wahyu and Yunus Kurniawan (entitled

Acceleration of Economic Growth Through MSME

Synergy and Good Governance in Indonesia, the

role of MSMEs in Indonesia is an crucial point in

driving economic growth. MSMEs can survive and

save the nation's economy when a crisis occurs.

Budi Wibowo (2017)

Based on research conducted by Budi Wibowo

(2017) with the title Fintech Analysis in Building

Economy in Indonesia, the presence of technology-

based financial services (FinTech) in Indonesia has

become a necessity in line with the development of

information and communication technology.

Auditia Setiobudi, Trianggoro Wiradinata (2018)

Based on the research conducted by Auditia

Setiobudi, Trianggoro Wiradinata (2018) entitled

SME Intention in Adopting Financial Technology in

East Java, the intention of the Indonesian people (in

East Java in particular) towards financial technology

products is quite high. From the UKM side or the

merchant and the customer side, there are lots of

advantages. The sustainability and development of

this product are supported by the company's

resources and competencies that are demonstrated.

5. CONCLUSION

The results of the study explain that mobile payment

services will be one of the influential factors,

especially in vertical Fintech and in general, in the

financial landscape. The challenge that has always

been there is to educate the public as customers to

optimize banking-based financial services. However,

the application-based approach seems to be able to

make the community educated on its own. The thing

offered by the application is user experience to solve

particular problems. Technology also affects user

acceptance of mobile payment services. This is

related to the way of conducting transactions. The

needs are unique, so it can be concluded that certain

technologies are not necessarily suitable for all

services. From what is currently available, the

average mobile payment utilizes three platforms for

payment, namely QR Code, NFC (Near-Field

Communication), and OTP (One-Time Password).

In terms of MSMEs or merchants and the customer

side, there are many advantages. The sustainability

and development of this product are supported by

the company's resources and competencies that are

demonstrated.

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