Driving Financial Inclusion in Indonesia with Innovative Credit Scoring

Latif Adam (), Jiwa Sarana, Bitra Suyatno, Muhammad Soekarni, Joko Suryanto, Tuti Ermawati, Yeni Saptia, Septian Adityawati, Erla Mychelisda, Yogi Pamungkas, M. Rifqy Nurfauzan Abdillah, Lisa Angelia and Mahmud Thoha
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Latif Adam: Research Center for Macroeconomics and Finance, National Research and Innovation Agency, Jakarta 12710, Indonesia
Jiwa Sarana: Research Center for Macroeconomics and Finance, National Research and Innovation Agency, Jakarta 12710, Indonesia
Bitra Suyatno: Directorate General for Financial Sector Stability and Development, Financial Policy Agency, Ministry of Finance of the Republic of Indonesia, Jakarta 10710, Indonesia
Muhammad Soekarni: Research Center for Macroeconomics and Finance, National Research and Innovation Agency, Jakarta 12710, Indonesia
Joko Suryanto: Research Center for Macroeconomics and Finance, National Research and Innovation Agency, Jakarta 12710, Indonesia
Tuti Ermawati: Research Center for Macroeconomics and Finance, National Research and Innovation Agency, Jakarta 12710, Indonesia
Yeni Saptia: Research Center for Macroeconomics and Finance, National Research and Innovation Agency, Jakarta 12710, Indonesia
Septian Adityawati: Research Center for Macroeconomics and Finance, National Research and Innovation Agency, Jakarta 12710, Indonesia
Erla Mychelisda: Research Center for Macroeconomics and Finance, National Research and Innovation Agency, Jakarta 12710, Indonesia
Yogi Pamungkas: Directorate General for Financial Sector Stability and Development, Financial Policy Agency, Ministry of Finance of the Republic of Indonesia, Jakarta 10710, Indonesia
M. Rifqy Nurfauzan Abdillah: Directorate General for Financial Sector Stability and Development, Financial Policy Agency, Ministry of Finance of the Republic of Indonesia, Jakarta 10710, Indonesia
Lisa Angelia: Directorate General for Financial Sector Stability and Development, Financial Policy Agency, Ministry of Finance of the Republic of Indonesia, Jakarta 10710, Indonesia
Mahmud Thoha: Research Center for Macroeconomics and Finance, National Research and Innovation Agency, Jakarta 12710, Indonesia

JRFM, 2025, vol. 18, issue 8, 1-20

Abstract: Innovative Credit Scoring (ICS) holds promise for reshaping financial inclusion in Indonesia, offering a potent alternative to conventional credit assessments that often exclude underserved populations. By leveraging alternative data—from telco records to e-commerce and social media footprints—and AI/ML technologies, ICS can deliver more accurate, inclusive, and responsive credit evaluations. However, its potential is constrained by structural inefficiencies and weak regulatory frameworks. This study employs a qualitative, exploratory design based on eight focus group discussions with 36 stakeholders, including regulators, financial institutions, data providers, and academics. Thematic analysis reveals three core barriers: fragmented regulation, limited data interoperability, and algorithmic opacity. To address these challenges, the paper recommends four policy priorities: (1) enforce and expand POJK 29/2024; (2) establish interoperable, integrated MSME data systems; (3) mandate algorithm audits to reduce bias and opacity; and (4) invest in digital infrastructure to close regional access gaps. Without these systemic shifts, ICS may fall short of its inclusive promise.

Keywords: financial inclusion; ICS; regulatory challenges; algorithmic bias; data protection (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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