JAKARTA — The recent hike in Bank Indonesia’s benchmark interest rate to 5.25% is expected to drive up borrowing costs across the banking sector. As traditional loans become more expensive, many consumers and businesses are turning toward alternative financing solutions, particularly peer-to-peer (P2P) fintech lending platforms.
Nailul Huda, an analyst and Director of Digital Economy at the Center of Economic and Law Studies (Celios), notes that fintech lending is becoming an increasingly vital option as household purchasing power faces mounting pressure. While the demand for digital financing is rising alongside tighter household budgets, this growth presents a double-edged sword for the industry.
“When demand surges, it creates two distinct scenarios: either the quality of lending improves, or the risk of default climbs,” Huda explained to Kontan on Thursday (May 28, 2026).
According to Huda, the top priority for fintech operators must be maintaining asset quality. To achieve this, companies are urged to bolster borrower verification processes, refine credit scoring systems, and tighten screening protocols using the Financial Information Services System (SLIK).
Competition Among Digital Banking Apps Intensifies
Advanced technology should, in theory, allow fintech platforms to enhance the accuracy of their credit scoring systems. By integrating SLIK data more rapidly, firms can implement more effective risk mitigation strategies to keep pace with the growing volume of loan applications.
Industry players are already proactively refining their risk management frameworks. PT Amartha Mikro Fintek (Amartha), for example, is combining Artificial Intelligence (AI) with hands-on field assistance to safeguard its portfolio quality.
Harumi Supit, VP of Public Relations at Amartha, explains that their approach goes beyond simple loan disbursement, focusing instead on empowering micro-entrepreneurs. “Our field assistance aims to boost the capabilities of Micro, Small, and Medium Enterprises (MSMEs) in business financial management, digital payments, and micro-investments,” she noted. These efforts are designed to make grassroots businesses more resilient against economic volatility. To date, Amartha has cumulatively distributed IDR 46 trillion in productive financing to approximately 4 million MSMEs across Indonesia.
Market Volatility Pressures Sharia Insurance Returns, Sukuk Remains a Staple
Data from the Financial Services Authority (OJK) reflects the sustained demand for digital credit, with outstanding P2P fintech financing reaching IDR 101.03 trillion as of March 2026—a 26.25% year-on-year increase.
However, this rapid expansion has been accompanied by a rise in credit risk. The OJK reported that the aggregate non-performing loan rate, known as the TWP90, stood at 4.52% in March 2026. While this represents a significant increase from the 2.77% recorded in March 2025, it marks a slight improvement from the 4.54% observed in February 2026, suggesting that the industry’s risk mitigation efforts are beginning to stabilize.
Summary
Bank Indonesia’s decision to raise the benchmark interest rate to 5.25% has increased traditional borrowing costs, leading consumers and businesses to shift toward peer-to-peer (P2P) fintech lending. While this trend offers a vital financing alternative during periods of economic pressure, experts warn that the surge in demand risks rising loan defaults. To mitigate these threats, analysts emphasize that industry players must strengthen credit scoring systems and enhance borrower verification protocols.
Despite the rising risks, the demand for digital credit remains strong, with P2P lending outstanding reaching IDR 101.03 trillion as of March 2026. Industry leaders are actively refining their risk frameworks by integrating advanced technology and field assistance to maintain portfolio quality. Although the aggregate non-performing loan rate has increased compared to the previous year, recent data suggests that proactive risk management efforts are beginning to stabilize the sector.