Fintech Peer to Peer Lending as Approach to Encourage Economic Inclusion for Rural Communities in Indonesia

The paper aims to explain the use of Peer to Peer Lending-based fintech as a platform in creating economic productivity in Rural Areas in Indonesia. Peer to Peer Lending to suppress economic and social inequalities for people who are far from urban access. As for the background of this writing because Indonesia is one of the countries considered to have the potential to increase economic growth through digital financial inclusion in the Southeast Asia Region, although based on the facts some Indonesian people are still not netted in banking and investment accounts that are largely experienced by rural communities. Peer to Peer Lending is considered potential because it can reach unlimited digital-based financial services. First geographically, the vast area of Indonesia is mostly in rural areas has affect to the lack of financial access for rural communities and low levels of economic productivity. Secondly lack of formal education in rural environment can overcome by Peer to Peer Lending through cutting bureaucracy and tight requirement in conventional banking by using integrated digital and technology of finance. Third, this paper will show that fintech Peer to Peer Lending as the one of sustainable finance rather than the platform has been exists by Indonesia Government for rural areas. In this section, the platform of Peer to Peer Lending can be used to sustainable finance and economy during the recovery pandemics Covid-19, whereas it refers to the concept less physical contact economy. Furthermore the paper has conducting obstacle to implementing Peer to Peer Lending for rural communities include: lack of formal education, infrastructure and public transportation. Therefore the author has draft the framework to overcome the issues that involved strong stakeholder include: national government, bank and financial sector, academic and research institution, non-profit and fintech group. First; strengthening financial and digital literacy for rural communities through empowerment program, the empowerment will focus on practically to using Peer to Peer Lending platform between lenders and borrowers. In this section the empowerment program must emphasize management risk for rural community to using this platform such us identifying the asset of borrowers. The borrowers must have ability identifying and arrange their financial history and asset as building Secondly: the paper will emphasize the structural and system for the readiness of Peer to Peer Lending platform for rural community. This paper will also examine whether the financial of technology based on peer to peer lending is effective for rural communities in Indonesia by conducting and analyzing data; smartphone user, population growth and unbankable MSME’s. The results of the data will used to prove that this platform can reduce social and inequality for rural communities in Indonesia.