Factors Influencing Online Lending Intentions in Cimahi Indonesia
Factors Influencing Online Lending Intentions in Cimahi Indonesia
Factors Influencing Online Lending Intentions in Cimahi Indonesia
ABSTRACT : The purpose of this study is to determine the factors that influence the interest in managing
online financial technology (peer to peer lending) including factors such as income level, needs, lifestyle,
interest rates, procedures and promotions. The population in this study is online loan users who are in Cimahi.
The sampling technique used in this study is the probability sampling technique and sample data obtained as
many as 110 respondents. This study uses primary data obtained from questionnaire results and then analyzed.
Based on testing, the income results have a negative and significant effect on the interest in using online
financial technology. Needs, interest rates, procedures, and promotions have a positive and significant effect on
the interest in using online financial technology. Lifestyle does not affect the interest in using online financial
technology.
KEYWORDS - Interests, Online Lending, Income, Lifestyle, Needs, Interest, Procedure, Promotion
I. INTRODUCTION
Technology and the internet have a very big role in supporting all activities of human life. The very
large utilization of digital technology in Indonesia has an impact on several sectors, one of which is the business
sector or business industry which then gave birth to online commerce or e-commerce. However, the impact of
the rapid development of technology and the internet has not only penetrated the trade industry, but also to the
Indonesian financial industry. This was marked by the presence of financial technology or what is now better
known as FinTech.
Financial Technology or FinTech is an innovation or use of technology in the financial system that
produces innovative products, services and/or business models. Fintech obtains a role to accelerate the
expansion of financial services. In Indonesia, fintech financial services that are currently developing, one of
them is funding or lending and borrowing services based on information technology in the type of peer to peer
(P2P) lending, or what is often referred to as FinTech peer to peer lending. This service refers to the practice of
lending and borrowing money that is done without going through traditional financial intermediaries such as
banks. The advantage of this service lies in the process of bringing together borrowers with those who provide
loans easily and the process of implementing agreements carried out digitally. So that this service retains the
potential to fulfill funding needs quickly, easily, and efficiently.
According to a World Bank survey of Indonesians over the age of 15 (2014), only 36% accept accounts
in formal financial institutions. Furthermore, only just 27% consider savings, and only 13% borrow from formal
financial institutions. (Nugroho, 2017). This makes FinTech peer to peer lending a promising lending service for
P2P FinTech industry players because it can reach and be accessed by Indonesians who are untouched by banks,
as well as being a solution for service users in gaining financial access and financing. The presence of this P2P
FinTech service is becoming an emerging market in the financial sector, and this is marked by an increase in the
platform or providers of FinTech lending in Indonesia, in general, is growing rapidly. This increase indicates the
enormous potential for FinTech startups in Indonesia to continue to grow.
In line with this, there is additionally an increasing trend in the number of loan funds that have been
successfully channeled through peer to peer lending in Indonesia from 2016 to 2019 as shown in Figure 1.
Figure 1 shows a significant increase of 784% from 2017 to 2018 in the number of loan funds that have
been distributed, along with the increase in lending peer to peer (P2P) transactions in Indonesia. This shows that
the number of borrower accounts that are fluctuating tends to increase while the number of providers.
Increasingly means that competition in the electronic funding business is getting tighter. The growth of
platforms or providers as service providers and users of the service itself is so rapid along with the increasing
needs of the community for electronic funding transactions. This is causes providers or service providers to
compete to provide good service and uncomplicated procedures and are demanded to continue to innovate,
provide convenience, and complete market needs. The ability of FinTech service providers to provide products
and services that are in accordance with the needs and desires of the community define the benchmark for the
community in performing decisions for online loan.
But in reality, the existence of peer to peer lending is not without the risk of fierce competition between
platforms to increase the risk of default. Some risk management tools are considered effective in reducing
default risk. In addition, stock market conditions or increased speculative investment opportunities carry out a
significant role in raising platform level standards.
financial technology peer to peer lending or online loan means a person's desire to use technology in making
loan decisions.
The decision of someone in taking loan remains a process of taking loan by considering many factors
before someone makes a decision to take loan at a financial institution. In the theory of decision making
proposed by Kotler (2008: 184) The decision-making process consists of factors considered or that influence a
person's decision to take loan is divided into two, namely internal factors and external factors.
2.1.2 Needs
Needs are everything that a person needs to maintain life and to obtain welfare and comfort. According
to Maslow (in Polisoa et al, 2016) human needs are arranged in a hierarchy. The lowest level of
hierarchy/physiological needs and the highest level is the need for self-realization.
Maslow's theory assumes that people try to accommodate more basic needs (physiological) before
directing behavior to meet higher needs (self-realization). This theory is in line with Probovury's (2013) study
which states that the main and most important factor for encouraging someone to take loan remains urgent
essential needs. Everyone must possess a time when they absolutely require money because they maintain
sudden needs that are critically important and urgent. When in such circumstances, someone will definitely
affect an escape to a financial institution to meet those needs. From the results of this research, the needs that
most encourage someone's interest to allow loan includes domestic needs or fundamental needs as well as for
capital.
In line with research conducted by Prabovury, research by Polisoa et al (2016) also states that needs
cause a significant effect on the decision to pay by a BCA credit card. The higher the needs that arise, the
tendency of people to pay by BCA credit cards will be higher.
2.1.3 Lifestyle
Kotler and Keller (in Polysoa et al, 2016) say lifestyle is a person's lifestyle in the world that is
expressed in the activities, interests, and opinions of that person. Lifestyle describes the life of humans as a
whole who interact with their environment. Lifestyle reflects something beyond social class.
According to Trimartati (2014) lifestyle is directly related to the times and technology. Increasingly the
age of increasingly sophisticated technology, the development of lifestyle applications by humans in ordinary
life equally develops. Lifestyle is basically behavior that reflects the problem of what is actually in the mindset
of customers who tend to blend in with various things related to consumer emotional and psychological
problems. Someone's personality will affect his behavior, if someone views the lifestyle of hedonism in
accordance with personality, then the individual will follow the lifestyle of hedonism.
Based on research conducted by Rosyi (2018) lifestyle causes a significant effect on debt management
behavior. This means that the more luxurious and hedonism a person's lifestyle will increase consumer behavior.
Consumptive lifestyle represent a behavior that is marked by the existence of luxury and excess life.
Consumptive behavior is also shown in the use of all things considered to provide maximum satisfaction and
physical comfort. For example where women use technology like e-commerce to meet their needs, buy various
kinds of goods with excessive quantities and not on the basis of primary needs but on the basis of fulfilling
desires, satisfaction, and pleasure. According to Josep Plimer (in Rosyi, 2018) said that lifestyle indicators
include:
a. The pattern of someone spending their time.
b. Someone's interest.
c. One's view of oneself and others
d. Basic characters such as the stage a person goes through in the life cycle of education and where they live.
Research conducted by Polisoa et al also states that lifestyle causes a significant effect on decisions
using credit cards. In line with these research studies, Murdwiyanto (2018) mentioned in his research that
lifestyle factors are one of the factors that influence MSME decisions in accepting loans through P2P lending.
2.2.3 Promotion
The third external factor is the promotion factor, which is a promotion carried out by banks or other
institutions to customers. Promotion is one of the determining factors for the success of a marketing program.
The primary purpose of the promotion is to inform, influence, and persuade and remind target customers about
the company. The purpose of the promotion, among others, inform (informing) can be in the form of informing
the market about the existence of a new loan product, informing the services provided, etc. Then the second goal
is persuading the target customer (persuading) , and the third goal is reminding which can consist of reminding
the customer that the related loan product is needed in the near future, causing the customer keep in mind even
though there is no advertising campaign, keeping the customer's first memory falling on loan products offered
(Permatasari, 2017).
Without promotion, a person or customer will not be able to get to know banks or other financial
services such as online loan. Therefore, promotion is the most powerful means to persuade someone to manage
loan and retain their customers. Kasmir (2014) adds broadly that four types of promotional tools can be used by
every bank in promoting both products and services, namely advertising, sales promotion, namely promotions
used to increase sales through price cuts and prizes in certain times for certain products. Publicity, which is a
promotion carried out to improve the image in front of prospective customers or their customers through
sponsorship of a charity or social or sports activity. And personal selling (personal selling) is a promotion
carried out through employees' personal or through word of mouth from customers or people who have granted
loan that will also influence someone's interest.
According to Probovury research (2015), promos conducted affect customer decisions in taking loan
because customers will also be interested if the price offered is very attractive so the more attractive the promo
is given, the more people who take loan. In line with the research, Saragih also conducted a study that
promotion influenced decision making by 55.33%.
III. METHODOLOGY
The object of research in this study obtains online financial technology (FinTech peer to peer lending).
In Indonesia, there is 127 peer to peer lending FinTech organizers registered in the OJK (Otoritas Jasa
keuangan) until August 2019. Among them are Kredivo, Akulaku, Kredit Pintar, Uang Teman and others. Based
on the variables examined, the research method used in this research proposal is descriptive quantitative
research methods with multiple regression methods. The quantitative obtained is a number/scoring of
respondents' perceptions about the factors that influence the interest in using financial technology P2P lending
or online loan.
The population in this study is FinTech users of peer to peer lending or online loan (both cash loan
applications and loan items) in the city of Cimahi. The sampling technique or method used in this study is the
probability sampling Indicator measured practicing a Likert scale. Because the aggregate population is
unknown, researchers adopted the random sampling technique. The sample size represents 120 respondents.
From the results of the multiple regression analysis above, the following equation can be obtained:
Online Lending Intentions = 5,478 + -0,756 Income + 0,261 Needs +0,020 Lifestyle + -0,156 Interest Rates +
0,165 Procedure + 0,104 Promotion
Based on data processing, the results of the F statistical test analysis are as follows:
Based on the table above, the calculated F value is 82.522 while the F table value is 2.19 and the
significance value is 0.000. Significance value < 0.05, then Ha is accepted and Ho is rejected, meaning there is
an influence of income level, needs, lifestyle, interest rates, procedures, and promotion of interest in using
online loan. And Based on the results of the previous calculation it can be seen that the coefficient of
determination is 82.8%. This means that the variable level of income, needs, lifestyle, interest rates, procedures,
and promotions have contributed 82.8% to the interest in managing online loan.
V. CONCLUSION
This article will fill the void in current research by providing a resource-based analysis of the
underlying key drivers of digital payments for FinTech companies in Indonesia. The exponential growth of the
number of FinTech companies in Indonesia can be explained by referring to, at the very least, the typical
evolutionary power of users especially millennial generation. Associated companies recognize that technology
(and especially software applications) creates great opportunities to innovate new service strategies and sell
large-scale products. The IT technology ecosystem in the country with the presence of the internet and
smartphones allows businesses to grow rapidly and sometimes exponentially, while marginal costs are reduced
by the addition of software users.
The success of the existing financial technology companies shows that this is becoming an alternative
business model in Indonesia supporting other industries offering profitable business opportunities through
national in Indonesia. This new business model and service generate an innovation strategy for Digital Payment
services in the country. With this existing systemic use of prototyping and design creating benefits, trust,
efficacy, ease of use, and security services that offer faster, cheaper, and less user experience will open excellent
opportunities for SMEs and other business players. These strategies enable the service to succeed, and many
times rapidly grow to current users and business players.
The ongoing changes in the financial technology landscape have affected peers under or have no
landing bank accounts, digital payments, and create convenient solutions and easy to use. Although
contemporary global trends are accepted. More and more attention from various stakeholders, especially in
Indonesia (and in ASEAN countries), the phenomenon of FinTech remains a modern area and has not been
studied.
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