Indonesian P2P lenders to disburse $30.63b in loans by 2024

The rapid growth of e-commerce will support alternative lending options.

P2P lending in Indonesia is set for rapid growth as the operators of such platforms are expected to disburse $30.63b (IDR430t) in loans by 2024 which represents four times the amount in 2018, according to a report from Ken Research. 

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As customers turn to e-commerce as a result of improvements in internet and mobile phone penetration, demand for working capital funding will also increase, effectively fuelling the P2P expansion. E-money transactions in Indonesia hit $3.3b (IDR47.2t) in 2018 with as many as 173.8 million digital money instruments issued in January 2019, data from Fitch Solutions show.

"The market for Peer-to-Peer lending would increase further for the period 2019E-2024E. With the Indonesian government rolling out an e-Commerce roadmap, aided by adoption of digital technology, more borrowers and lenders are set to participate in the Peer-to-Peer lending market," Ken Research said in a statement. 

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There are more than 100 platforms currently registered with the financial regulator and more than 100 still in the pipeline to obtain registration, according to Ken Research.

Moreover, the sandbox testing mechanism introduced by the country's financial regulators may also help these platforms gain regulatory and operational acceptance. 

To stay competitive, P2P lenders may forge partnerships with major financial institutions to gain access to larger capital base that can respond to heightened demand from borrowers. In return, banks can cash in from these links as they benefit from a wider customer base and reduce the costs related to credit assessment by outsourcing these activities to the platform operators.