The Utilization of Fintech (P2P Landing) as SME’s Capital Solution in Indonesia: Perspective in Islamic Economics (Qirad)

Abstract

FinTech as a technology-based financial service, generally opens opportunities for increased efficiency in creating new business, better risk management and ease of transactions and trading activities. The limited access to capital resources (particularly banking) and with many SMEs that are unable to obtain financial services, is utilized by FinTech (P2P lending) practicioners as a good business opportunity at this moment. Fintech P2P Lending is considered able to overcome the problems of Small and Medium Enterprises (SME) and become one of the captial solution and empowerment strategy for SME in the future. This is because it enables small business owners or SME to get their capital in a shorter time with more simple terms and conditions, and also with the shorter loan period. It will be encouraging the development of SMEs, which will, in a long run, affect the equity level of welfare and the economy of the middle classes. As one of the majority Muslim countries, Indonesia should apply the FinTech-based financial transaction service pattern in accordance with the perspective in Islamic economics (Qirad). Where in lending the capital must be in accordance with the provisions set by God. In Qirad, it is stipulated that in lending the capital to others, then the lender has to know or understand what type of business will be done by the borrower.