DESIGNING MICRO-FINTECH MODELS FOR ISLAMIC MICRO FINANCIAL INSTITUTION IN INDONESIA

Ascarya () and Ali Sakti
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Ascarya: Bank Indonesia
Ali Sakti: Bank Indonesia

No WP/09/2019, Working Papers from Bank Indonesia

Abstract: Financial technology (fintech) has disrupted financial industry, including Islamic finance, and Islamic microfinance in particular, so that Islamic microfinance institution (IMFI), such as Baitul Maal wat Tamwil or BMT in Indonesia, has also been disrupted by fintech and has been forced to anticipate the arrival of micro-fintech, i.e. fintech in microfinance. This study aims to determine the characteristics needed by micro-fintech for IMFI/BMT using Delphi-Likert methods, to design micro-fintech models for IMFI/BMT based on those characteristics, and then to determine micro-fintech model suitable for IMFI, such as BMT, using Delphi-ANP methods, to ensure its sustainability in achieving its social and commercial objectives. The first results show that micro-fintech needed by IMFI/BMT are digital banking, payment, P2P financing, P2P social and e-Commerce, which could be developed by the BMT, APEX or Association and could be collaborated with existing Fintech Company specialized in micro-fintech, applying offline to online approach (OTO), meaning that commercial funding as well as social fundraising of zakat and waqf would be conducted online, while commercial financing to micro and small enterprise (MSE) customer and disbursement of zakat and waqf would be conducted offline. The second results show that limited open ecosystem and hybrid ecosystem are the most appropriate microfintech ecosystem for IMFI/BMT with various alternative models. However, private closed ecosystem with micro-fintech model developed by the APEX or Association is the preferred model by BMT to ensure its sustainability and outreach to the poor.

Keywords: Micro-Fintech; Fintech; Islamic microfinance; Microfinance; IMFI; BMT (search for similar items in EconPapers)
Pages: 66 pages
Date: 2019
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http://publication-bi.org/repec/idn/wpaper/WP092019.pdf First version, 2019 (application/pdf)

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