The issue of defaults continues to affect several fintech peer-to-peer (P2P) lending platforms, with the latest case involving PT Lunaria Annua Teknologi (KoinP2P), a subsidiary of Koinworks. This case highlights the challenges faced by fintech lenders as the company is struggling with a default stemming from alleged criminal actions by one of its borrowers.

Technology expert and Executive Director of the ICT Institute, Heru Sutadi, points out that this problem arises largely due to weak oversight by regulatory authorities. He believes that existing regulations are inadequate and often favor fintech lenders over borrowers. This lack of stringent oversight has led to a rise in financial risks within the sector.

Sutadi also highlights the inefficiency of the credit scoring systems used by P2P lending platforms. According to him, these systems fail to rigorously assess the creditworthiness of potential borrowers. The inability to accurately evaluate borrowers’ ability to repay loans further exacerbates the risk of defaults in the industry. He argues that the introduction of stricter regulations, particularly in the area of credit scoring, is essential for the growth and stability of the fintech lending sector.

Similarly, Nailul Huda, an observer and Director of the Center for Economic and Law Studies (Celios), points to regulatory gaps within POJK 10/2023, which, while an improvement over previous regulations, still leaves room for issues such as default risk. Huda explains that one of the weaknesses in the current regulation is the lack of effective use of credit scoring, which plays a crucial role in assessing a borrower’s repayment capacity and a lender’s investment criteria.

Huda advocates for a more refined and comprehensive approach to credit scoring within the fintech lending sector. According to him, regulators must ensure that the rules surrounding the use of data and methods for calculating borrowers' repayment abilities are more robust and prudent. The goal is to enhance the accuracy and reliability of credit assessments, reducing the likelihood of defaults in the future.

Both experts agree that the fintech lending industry needs stricter regulations and improved credit scoring systems to prevent further defaults. With stronger oversight, the hope is that fintech lenders can continue to grow and provide essential financial services while minimizing the risks that have plagued the sector.

KONTAN